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, of 1949 through an Amendment in 1966. 

Which of the statements given above is/are correct? 

(a) 1 only 

(b) 2 and 3 only 

(c) 1 and 3 only

(d) 1, 2 and 3 

Answer: b

Explanation: 

The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary cooperative banks located in urban and semi-urban areas. These banks, till 1996, were allowed to lend money only for non-agricultural purposes. This distinction does not hold today.

  Large cooperative banks with paid-up share capital and reserves of Rs.1 lakh were brought under the purview of the Banking Regulation Act 1949 with effect from 1st March, 1966 and within the ambit of the Reserve Bank’s supervision.

This marked the beginning of an era of duality of control over these banks. Banking related functions (viz. licensing, area of operations, interest rates, etc.) were to be governed by RBI and registration, management, audit and liquidation, etc. governed by State Governments as per the provisions of respective State Acts. 

In 1968, UCBS extended the benefits of Deposit Insurance.

Hence, option b is correct.

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