Satish Marathe firmly believes that this process would enhance credibility and inspire confidence among the depositors
The Reserve Bank of India has recently framed new guidelines on the appointment of managing director / whole-time director for urban cooperative banks. It has said the managing director of a UCB shall function under the overall general superintendence, direction and control of the Board of Directors of the bank. The UCBs shall ensure that the MD/ Whole-Time Director shall be a graduate, preferably with qualification in banking / cooperative banking such as CAIIB / diploma in banking and finance/diploma in cooperative business management or equivalent qualification, or Chartered / Cost Accountant / MBA (Finance), or post-graduation in any discipline. A circular issued by the central bank in this regard specifically state that, the MD/ CEO shall not be holding the position of a member of Parliament or state legislature or municipal corporation or municipality or other local bodies.
RBI has also decided that all UCBs having asset size of ₹50 billion or above, shall appoint a Chief Risk Officer (CRO) by 31 March 2022 and set up a Risk Management Committee of the Board. The Board must clearly define the CRO’s role and responsibilities and ensure that he/she functions independently. The CRO shall have adequate professional qualification/experience in the area of risk management. In case the CRO reports to the MD/CEO, the Board or the RMC shall meet the CRO, without the presence of the MD & CEO, at least on a quarterly basis. Further, there shall not be any ‘dual hatting’ for CRO. RBI has also laid a number of other specifications in a couple of latest circulars to the UCBs.
In initiating these steps, the RBI feels it will help to professionalize operations and improve governance in urban cooperative banks.
We sought views of 6 leading cooperative bankers on these reform measures.
A welcome and timely step
Satish Marathe, Founder Member, Sahakar Bharati, and Director, Central Board, RBI:
The guidelines with regard to the appointment of MD / CEO and whole-time director are welcome and timely. Running a bank, including an UCB, is more complex and challenging than it was a few years back. Prescribing norms for appointment of MD/CEO and whole-time director will go a long way in professionalizing operations besides improving governance.
If one views the current scenario dispassionately, one will agree that the UCB sector needs executives who are qualified, experienced and who have enough exposure. While there may be some hiccups initially, in the long run this process would enhance credibility and inspire confidence among the general public, particularly, depositors.
Since, the appointment is being confirmed by the RBI, to an extent the MD/CEO would be independent and will have relatively more operational space. The provision for appointment of wholetime director (read executive director) though new in the UCB sector, will greatly facilitate succession planning in the concerned banks.
MDs/CEOs, who will have to demit office, and who will fit the norms, can be appointed as an Advisor to the Board or Officer on Special Duty for discharge of specific functions. To avoid, heart burning, such an appointee may directly report to the Chairman. All UCBs, particularly, large and medium-sized, need to put in place risk management systems, processes and appoint dedicated, qualified and experienced officers as a part of risk mitigation. Appointment of CRO, is a first step in this direction. Role and functioning have been well laid down in the RBI circular. Though today it has been made applicable to UCBs with asset base of ₹50 billion, all scheduled and medium-sized UCBs should initiate steps to emulate and implement the guidelines for strengthening the UCB sector.
Pramod Karnad asks how long will the RBI wait in problem cases as it is expected to be protecting the interests of depositors
Being non-political should be the eligibility for Director/ Chairman
Pramod Karnad, Administrator, Beed DCCB, Maharashtra and Former Managing Director, Maharashtra State Cooperative Bank:
Continue reading your story on the app
Continue reading your story in the magazine
Mental Health & D&I: Both Problems Have Similar Solutions
The pandemic has created heightened awareness about mental health issues, while Diversity & Inclusion (D&I) issues have been steadily becoming more visible. While the problems are distinct, there is a lot in common among the solutions:
Bandhan Bank: Building a robust, granular liabilities franchise
On the occasion of its 6th Foundation Day celebrated on 23rd August, Chandra Shekhar Ghosh analyses the bank’s achievements and explains how it has earned the trust and confidence of 23 million Indians:
A platform to buy and sell anything seamlessly
BNP Paribas has a unique platform, Cortex Life, that allows traders to sell or buy everything from bullion to currencies and also do trading in currencies or commodities:
Fikar Not Says Fino's Brand Ambassador
Anand Bhatia, CMO, Fino Payments Bank shares details of the journey to appointing a brand ambassador for the bank and planning the creative and media:
Covid boosts top-up loans & balance transfers
Arvind Hali, MD & CEO, Motilal Oswal Home Finance reveals how the pandemic is affecting business and how the company is responding:
Boosting organizational and systemic resilience
Mahesh Kumar Jain, Deputy Governor, Reserve Bank of India, gave a speech titled ‘Building a More Resilient Financial System in India through Governance Improvements’ on June 18, 2021 at the India international Centre, New Delhi. Edited excerpts:
South Africa enhances safety, efficiency & access
In March 2018, the South African Reserve Bank (SARB) published the National Payment System Framework and Strategy – Vision 2025, with the overarching vision to enhance the safety, efficiency and accessibility of the national payment system in a manner that promotes competition and minimises risk to the payments ecosystem by leveraging technological developments to extend the availability of digital payments to all sectors of society while meeting domestic, regional and international requirements for the benefit of all members of South African society. Vision 2025 comprises 9 goals.
BFSI SECTOR TURNS Green
The BFSI sector is keenly adopting green policies, practices and technologies with the aim of being more sustainable and protecting the environment:
Model Insured Villages to Boost Rural Penetration
Neeraj Prakash, Managing Director, Shriram General Insurance shares the company’s strategies to tap rural markets and leverage new technologies:
Virtual surveys hasten loss assessment
Ravichandran N., CTO, at Kotak Mahindra General Insurance explains how the insurer will be leveraging advanced modelling tools in response to heatwaves and flooding:
Criminal justice advocate Steven Medeiros is taking life's challenges in stride.
The Shift at 60
The change in later life can be just as dramatic and rewarding as the change from adolescence to adulthood. AN INTERVIEW WITH CHARLES GARFIELD, PHD
2019 Innovator of the Year - Omar Yaghi
Scientific advances transform our lives in miraculous ways.
Cisneros Celebrates Macondo
Twenty-five years ago author Sandra Cisneros founded the Macondo Writers Workshop when she invited eight people to convene in the kitchen of her San Antonio, Texas, home.
India's Stressed Banks
“This is the classic crisis of confidence”
India Is The Latest To Meddle In Its Central Bank's Affairs
The autonomy of India’s central bank is under threat.
Unity SFB merger with PMC Bank by December-end
The Centrum Financial Services and Bharat Pe-backed Unity Small Finance Bank is set to launch its operations in a matter of weeks, which will then pave the way for the amalgamation of Punjab and Maharashtra Co-operative Bank's business with the new bank, Centrum Group Chairman Jaspal Bindra said today.
RBI raises concerns over Paytm brand for non-fin biz
The Reserve Bank of India has raised concerns about One97 Communications using the Paytm brand for non-financial service businesses, a banking industry source said.
वित्तीय समावेशन बढ़ाने पर जोर
सरकार ने बैंकों को पेंशन, बीमा और डिजिटल दायरा बढ़ाने का दिया निर्देश
आरबीआई ने एसबीआई पर ठोका 1 करोड़ का जुर्माना
दिशा-निर्देशों का पालन नहीं करने पर