UPSC CSE Prelims 2021
Statement 2 is correct. The Banking Regulation (Amendment) Act, 2020, enabled Urban Cooperative Banks (UCBs) to raise capital through the issuance of equity shares, preference shares, and other instruments, subject to Reserve Bank of India (RBI) guidelines. This measure aimed to strengthen their financial position.
Statement 3 is correct. Urban Cooperative Banks were brought under the purview of the Banking Regulation Act, 1949, through an amendment in 1996. This extended the regulatory oversight of the RBI to UCBs, particularly concerning their banking operations.
Statement 1 is incorrect. Prior to 2020, UCBs were under a system of dual control, regulated by both the RBI (for banking functions) and the Registrar of Cooperative Societies of the respective State Governments (for registration, management, and administration). However, the Banking Regulation (Amendment) Act, 2020, significantly enhanced the RBI's regulatory and supervisory powers over UCBs, bringing them almost entirely under the RBI's direct supervision, similar to commercial banks. Therefore, they are not supervised and regulated by local boards set up by State Governments in the manner implied.