Question

Given below are two statements:
Statement (I) : Cooperative Agriculture and Rural Development Banks were formerly known as Regional Rural Banks.
Statement (II) : In 2003, the RBI set up a committee under the chairmanship of Professor V.S. Vyas to review the working of RRBs.
In light of the above statements, choose the most appropriate answer from the options given below:

• A. Both Statement (I) and Statement (II) are correct.
• B. Both Statement (I) and Statement (II) are incorrect.
• C. Statement (I) is correct but Statement (II) is incorrect.
• D. Statement (I) is incorrect but Statement (II) is correct.

Hint:

- Land Development Banks (LDBs) were renamed Cooperative Agriculture and Rural Development Banks (CARDBs).
- Professor V.S. Vyas headed committees on agricultural credit flow, not a dedicated committee to review RRB operations.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
Evaluating rural credit systems requires a clear understanding of the institutional structure of rural cooperatives, commercial banks, and regional rural banks (RRBs), along with the various committees set up to review them.

Step 2: Detailed Explanation:
Let us analyze both statements:
- Statement (I):
Cooperative Agriculture and Rural Development Banks (CARDBs) were formerly known as Land Development Banks (LDBs) or Land Mortgage Banks (LMBs).
They provide long-term cooperative credit for land development and capital assets.
Regional Rural Banks (RRBs) are separate scheduled commercial banks established under the RRB Act of 1976.
Therefore, Statement (I) is incorrect.
- Statement (II):
In 2003, the Reserve Bank of India (RBI) constituted an Advisory Committee on Flow of Credit to Agriculture and Related Activities under the chairmanship of Prof. V. S. Vyas.
The primary focus of this committee was on expanding agricultural credit through commercial banks, cooperative banks, and micro-finance institutions, rather than specifically reviewing the working of RRBs.
Dedicated reviews of RRBs were conducted by other committees, such as the Kelkar Committee (1986) or the Bhandari Committee (1994-95).
Therefore, Statement (II) is also incorrect.
Both statements are incorrect.

Step 3: Final Answer:
The correct option is (B).