UPSC Prelims 2021 · GS Paper I
Question 5: Economy and Social Development
With reference to ‘Urban Cooperative Banks’ in India, consider the following statements :
- 1.They are supervised and regulated by local boards set up by the State Governments.
- 2.They can issue equity shares and preference shares.
- 3.They were brought under the purview of the Banking Regulation Act, 1949 through an Amendment in 1966.
Which of the statements given above is/are correct?
AnswerUPSC’s answer is (b).
Urban Cooperative Banks are regulated by the RBI for their banking business and by the State Registrar of Cooperative Societies (or the Central Registrar for multi-state ones) for management. They are not supervised by local boards set up by state governments. They were brought under the Banking Regulation Act, 1949 through an amendment effective in 1966, and they can raise capital through equity and preference shares. Remember: dual control, the RBI plus the Registrar of Cooperative Societies.
- 1. The RBI and the Registrar of Cooperative Societies regulate them, not local boards set up by states.
- 2. They can raise capital by issuing equity and preference shares.
- 3. The Banking Regulation Act was extended to cooperative banks through an amendment effective in 1966.
How you could have got this
- If you were sure statement 1 is not correct, (a), (c) and (d) go: each of them includes 1.
What you needed to know: The RBI and the Registrar of Cooperative Societies regulate them, not local boards set up by states.
Only (b) is left. You didn’t need statements 2 or 3.
Which options go is worked out from UPSC’s key and the options, not by a model.
Why each option is right or wrong
- (a) Wrong: statement 1 is false, since regulation is by the RBI and the Registrar, not local boards.
- (b) Right: statements 2 and 3 are correct.
- (c) Wrong: it includes statement 1, which is false, and leaves out statement 2.
- (d) Wrong: statement 1 is false.
Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2021, General Studies Paper I, Series A. The paper on upsc.gov.in.