RRBs & Co-operative — Set 2

Correct Answer: D. Service to members

Co-operative banks operate on the principle of 'no profit, no loss' and mutual help. Their primary goal is to provide financial services to their members who are also owners. Membership is generally based on shared interests or geography.

Correct Answer: C. Co-operative Societies Act

Co-operative banks are registered under the Co-operative Societies Act of the respective state or the Multi-State Co-operative Societies Act. While registered here, their banking activities are regulated by the RBI. This creates a dual control system in the sector.

Correct Answer: C. State Co-operative Bank

The State Co-operative Bank (StCB) operates at the top level in each state. It acts as a link between the RBI/NABARD and the lower tiers. It provides financial support to the district-level co-operative banks.

Correct Answer: D. DCCB

District Central Co-operative Banks (DCCBs) operate at the middle tier of the co-operative structure. They lend to the primary credit societies in the villages. They also manage funds received from the State Co-operative Bank.

Correct Answer: A. PACS

Primary Agricultural Credit Societies (PACS) operate at the village level. They interact directly with individual farmers and rural artisans. They are the most important link for delivering short-term crop loans.

Correct Answer: C. Co-operative Banks

In co-operative banks, voting power is based on membership rather than the number of shares held. This ensures democratic management and prevents dominance by wealthy individuals. It is a core tenet of the co-operative movement worldwide.

Correct Answer: A. Reserve Bank of India

While their administration is under the Registrar of Co-operative Societies, their banking operations are governed by the RBI. This includes licensing, interest rates, and capital adequacy. Recent law changes have strengthened RBI's control over these banks.

Correct Answer: C. Land Development Banks

Land Development Banks (LDBs), also known as SCARDBs, focus on long-term credit. These loans are used for permanent improvements to land or purchasing heavy machinery. They are distinct from the short-term credit provided by PACS.

Correct Answer: C. Anyital

The 'Anyital' Society was established in the then Baroda State. It is considered the earliest instance of organized urban co-operative credit in India. This was even before the formal Co-operative Credit Societies Act of 1904.

Correct Answer: A. RBI and State Government

Co-operative banks are regulated by the RBI for banking and the State Government for administrative matters. This duality often created hurdles in effective supervision. Amendments to the Banking Regulation Act in 2020 aimed to reduce this complexity.