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?

Answer: B. Statements 2 and 3 are correct; Statement 1 is wrong. URBAN COOPERATIVE BANKS (UCBs) are cooperative societies operating banking business in urban and semi-urban areas. Earlier they had DUAL REGULATION (cooperative aspects by state Registrar of Cooperative Societies, banking aspects by RBI). Statement 1 is WRONG. UCBs are NOT supervised and regulated by 'local boards set up by State Governments'. Banking functions of UCBs are supervised and regulated by the RESERVE BANK OF INDIA. The cooperative aspects (registration, management) were earlier regulated by the State Registrar of Cooperative Societies — but the BANKING REGULATION (AMENDMENT) ACT 2020 brought UCBs fully under RBI's regulatory framework for banking matters. Statement 2 is CORRECT. UCBs CAN ISSUE EQUITY SHARES AND PREFERENCE SHARES to their members for capital augmentation. The Banking Regulation (Amendment) Act 2020 specifically clarified and expanded their ability to raise share capital, including through preference shares, and to do so with prior RBI approval. Statement 3 is CORRECT. UCBs WERE BROUGHT UNDER THE BANKING REGULATION ACT, 1949 through an AMENDMENT IN 1966 (the Banking Laws (Application to Cooperative Societies) Act 1965, effective from 1 March 1966). This brought urban cooperative banks under RBI's banking supervision while leaving cooperative governance to states. Source: Banking Regulation Act 1949 / RBI Master Direction on Urban Cooperative Banks / Banking Regulation (Amendment) Act 2020.