Q.Explain the relationship of the Maharashtra State Co-operative Bank with the Reserve Bank of India and NABARD.

The apex bank looks upward to two national institutions — one that regulates it and one that mainly finances rural credit.

As the apex bank, the MSC Bank looks upward to two national institutions, with different roles.

A. Relationship with the Reserve Bank of India (RBI).

• As a regulator. Because it does banking, the MSC Bank is licensed and supervised by the RBI under the Banking Regulation Act, 1949 (as applicable to co-operative societies). It must keep the prescribed Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), obey the RBI's directions on lending and interest, and submit to its inspection. (As a co-operative, its registration, bye-laws and audit remain with the Registrar of Co-operative Societies — dual regulation.)
• As a source of finance. Historically the RBI refinanced the co-operative structure through the apex banks; much of this role for agriculture now runs through NABARD, but the RBI remains the ultimate banking authority.

B. Relationship with NABARD.

• NABARD (National Bank for Agriculture and Rural Development) is the country's apex institution for rural and agricultural credit. The MSC Bank is the main channel through which NABARD's refinance reaches the co-operative structure of Maharashtra. …

Do not merge the RBI and NABARD. The RBI is the banking regulator; NABARD is the main financier (through refinance) and a supervisor of ru …