RBI : Gandhi says urban co-op bks’ issues stem from faulty governance

.....“Many of the problems faced by the UCBs (urban co-operative banks) are due to governance issues and lack of professionalism,” Gandhi said at the ‘Conference of Urban Co-operative Banks’ held in Ahmedabad on Jun 8. A copy of his speech was posted on the RBI website today. Gandhi also pointed out that the functioning of urban co-operative banks was skewed towards creditors and that depositors had very little say in how their funds were managed. Creditors have a larger say in governance while depositors have very little stake and there is a need to empower them appropriately, Gandhi said. In his address, Gandhi also touched upon the need to evaluate the present regulatory framework for the transition of urban co-operative banks to full fledged commercial banks. “It is important to mention here that once co-operative banks reach a certain threshold level, they are also expected to follow a regimen like large banks and standardised global practices, which may not be possible within the existing legal structure of co-operative banks,” Gandhi said...........

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