UPSC Prelims 2021— Question 95

Urban Cooperative Banks are subject to banking regulation and supervision by the Reserve Bank within the applicable framework; they are not simply regulated by local boards of State Governments. They can issue shares subject to cooperative and banking-law provisions, and the Banking Regulation Act was extended to cooperative banks through the 1966 amendment. Hence statements 2 and 3 are correct. The final answer-key position for Set C identifies option B as the correct option. Option A — 1 only — is not correct because it does not satisfy the specific condition tested in the question; it represents an alternative that is contradicted, incomplete, or less precise than the accepted answer. Option B — 2 and 3 only — is correct because it is the alternative that matches the constitutional, historical, geographical, scientific or economic principle established above. Option C — 1 and 3 only — is not correct because it does not satisfy the specific condition tested in the question; it represents an alternative that is contradicted, incomplete, or less precise than the accepted answer. Option D — 1, 2 and 3 — is not correct because it does not satisfy the specific condition tested in the question; it represents an alternative that is contradicted, incomplete, or less precise than the accepted answer. For PYQ interpretation, the distinction between the correct alternative and merely related facts is important. UPSC often places plausible distractors beside the precise statement that matches the underlying rule, chronology, definition or empirical relationship. The answer should therefore be read against the exact wording of the question rather than against a broadly related fact.