Ever since amendments to Banking Regulation Act,1949 has been brought into effect from June 2020 hectic activities are taking place in the co-operative banking sector. RBI is now empowered to exercise more regulatory control over the co-operative banks, namely The State Co-operative Banks, The Central Co-operative Banks and the Urban co-operative banks. As a sequel to the amendments to B R Act,1949 circulars and directions are being issued by RBI from time to time. The object of bringing amendments to B R Act,1949 is to strengthen the co-operative banking sector which is a part of banking system in our country. Corporate governance in co-operative banks is now the buzz word. The boards, senior functionaries and employees of co-operative banks need to adopt themselves to the changing environment and align their activities so as to comply with regulatory prescriptions.
As a sequel to amendments to Banking Regulation Act,1949 and as a part of better governance system in Urban Co-operative Banks, RBI has issued direction to all UCBs vide circular no RBI/2021-22/60 DOR.GOV.REC.25/12.10.000/2021-22 June 25, 2021 Appointment of Managing Director (MD) / Whole-Time Director (WTD) in Primary (Urban) Co-operative Banks.
This decision of the RBI is a game changer in the management of UCBs. Hence forth the MDs/CEOs of UCBs will be under the dual control of the respective boards of UCBs and the RBI. The employment of MDs/CEOs in respective UCBs are contractual in nature. In future the MDs/CEOs will have more empowerment in the administration of the UCBs simultaneously saddled with onerous responsibilities.
In the recent years banking sector has undergone a sea change in its activities. UCBs being part of banking system are also undergoing a testing time especially due to covid pandemic situation. Managing the affairs of UCBs has become more challenging.
The management and MDs of UCBs need to be more prudent in carrying out banking activities. While it is a fact that the relationship between the MD and the Board is contractual in nature, in future, a more harmonised and coherent environment is called for from directors on the board as well as MD/CEO to take forward the administration of the bank in a smooth and profitable manner.
UCB Consultancy is always in the forefront to impart knowledge in banking to all category of employees of UCBs. In the light of the added responsibility on the part of MDS/CEOs of UCBs to carryon the banking activities in a more professional manner it is proposed to commence, at the first instance an educative programme for the MDs/CEOs of UCBs at this critical juncture. In this connection a series of articles will be published in this website in a phased manner.