RBI panel suggests new urban cooperative banks be board-driven

New Delhi: A Reserve Bank of India committee has recommended that new urban cooperative banks (UCBs) be controlled by the board management, with the chief executive officer (CEO) responsible for the management of the bank. A committee, headed by Y H Malegam, in its report on licensing of new urban cooperative banks, has asked the banks to form a management, which should include professionals, who will be responsible for bank's day-to day work under the supervision of CEO. "It should be made a condition of the license that every new UCB should be required to have a Board of Management (BoM) to be appointed by the Board of Directors (BoD) and a Chief Executive Officer (CEO) to be appointed by the BoM," RBI panel said. Currently, the urban cooperative banks are regulated by State Registrar of Cooperatives in case of banks operating in a single state, or Central Registrar of Cooperatives in case the bank does business in more than one state. The panel is of the view that RBI must be given 'unfettered powers' to control and regulate the functioning of these banks exactly the same way as it controls and regulates the functioning of a commercial bank. The committee's recommendations come after the announcement by the RBI in May that it will study the feasibility of providing banking license to cooperative credit societies with an aim to open banks, particularly in un-banked areas.

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