RRBs & Co-operative — Set 6

Correct Answer: B. Fixed by bylaws

The individual shareholding is limited to ensure broad-based ownership. These limits are defined in the specific bylaws of each society. This prevents any single person from controlling the bank's policies.

Correct Answer: C. Banking Regulation Act 1949 (Extended in 1966)

Banking laws were extended to co-operative banks in 1966. This brought them under the regulatory ambit of the RBI while administrative control remained with the state. This dual control has been a unique feature of the Indian system for decades.

Correct Answer: B. Scheduled Commercial Banks

RRBs are scheduled commercial banks under the RBI Act. This status allows them to avail credit facilities from the Reserve Bank. It also mandates them to maintain certain reserves like CRR and SLR.

Correct Answer: B. Sir Frederick Nicholson

Sir Frederick Nicholson studied European co-operatives and recommended similar models for India. His famous slogan was 'Find Raiffeisen'. This led to the enactment of the first co-operative law in India.

Correct Answer: D. 15-20 years

LDBs specialize in long-term credit ranging from 15 to 20 years. These loans are used for capital-intensive activities like digging wells or buying tractors. They are collateral-backed, usually by land mortgage.

Correct Answer: D. 2005

The process of merging RRBs of the same sponsor bank within a state began in 2005. This was done to improve their operational efficiency and financial strength. It has reduced the total number of RRBs significantly.

Correct Answer: A. Sponsor Bank is a mentor and shareholder

The Sponsor Bank holds 35% equity and provides initial guidance to the RRB. It helps in recruitment, staff training, and provides a line of credit. The relationship is designed to bridge the gap between commercial banking and rural needs.

Correct Answer: B. Reserve Bank of India

PACS are outside the purview of the Banking Regulation Act. They are strictly regulated by the State Co-operative Societies Act and the Registrar. They do not have a license from the RBI to perform full banking functions.

Correct Answer: C. Mobilizing rural savings

One of the key functions of RRBs is to collect savings from rural households. They offer various deposit schemes like savings accounts and FDs. This helps in capital formation in the rural economy.

Correct Answer: C. 15%

State Governments contribute 15% of the total paid-up capital of an RRB. This ensures local administrative support for the bank's operations. The percentage is fixed by the RRB Act of 1976.