Aiming to protect the interest of the depositors and management, Reserve Bank of India has proposed that all Urban Co-operative Banks (UCBs) having deposits of over Rs 100 crore will have to set up a Board of Management.
In a draft, RBI also said that the activity must be done within one year to promote professional management in the banks. Since UCBs are accepting public deposits, it is imperative that a separate mechanism be put in place to protect the interests of depositors. RBI said while proposing to implement a BoM consisting of members with special knowledge and practical experience in banking to facilitate professional management and focussed attention to banking related activities of UCBs.
BoM will be in addition to the Board of Directors (BoD), said the RBI’s draft guidelines on which it has invited public comments by July 24. An expert committee on licensing of new Urban Cooperative Banks (2010) set up under the chairmanship of Y H Malegam had recommended, inter alia, that a BoM in every UCB, in addition to the BoD, which was reiterated by the High Powered Committee on Urban Cooperative Banks (Chairman R Gandhi) constituted in January 2015.
After considering the feedback of the stakeholders, it has been decided to implement the suggestion of the Malegam Committee on putting in place a BoM in addition to BoD in UCBs, the RBI said. Currently, the BoD of a UCB perform both the executive and supervisory roles and has the responsibility to oversee the functioning of UCB as a co-operative society as well as its functions as a bank.