The extract of the Gazette Notification JUNE 12, 2021 [PART III—SEC. 4]23rd March 2021 No. DoR.HGG.GOV. 668/12.10.000/2020-21 is as follows,
In exercise of the powers conferred by section 53A read with clause(zj) of section 56 of the Banking Regulation Act, 1949 (10 of 1949), the Reserve Bank, being satisfied that it is necessary so to do, hereby declares that the provisions of item (iii) of clause (b) of sub-section (1) and sub-section (2) of section 10, clause (a) of sub-section (2) of section 10A, sub-section (1A) of section 10B and clause (b) of sub-section (1) of section 35B of that Act shall not apply to a primary co-operative bank having liabilities in the form of deposits amounting to less than Rs100 crores as per preceding year’s audited balance sheet and to a primary co-operative bank, which is a Salary Earners’ Co-operative Bank. Explanation: “Salary Earners’ Co-operative Bank” shall mean a primary co-operative bank whose membership is confined to persons who are or were employed in an institution or a group of institutions and recognised as such by the Reserve Bank.
Prior approval of RBI for appointment/re-appointment/termination of appointment of MD or WTD not required. However, the board of these banks are required to formulate a Board approved policy based on all the other provisions of these directions for appointment / re-appointment / termination of appointment of MD or WTD. These banks shall immediately report the appointment /re-appointment / termination of appointment of MD or WTD to respective Regional Offices (Department of Supervision, Central Office, in case of UCBs under jurisdiction of Mumbai office) of the Reserve Bank.
The UCBs shall ensure that the following ‘fit and proper’ criteria is fulfilled by the person being appointed as MD/ WTD.
Fit and proper criteria-(Eligibility)-The person shall be a graduate, preferably, with (a) Qualification in banking/ co-operative banking such as CAIIB / Diploma in Banking and Finance / Diploma in Co-operative Business Management or equivalent qualification; or (b) Chartered / Cost Accountant / MBA (Finance); or (c) Post graduation in any discipline.
The person shall not be below the age of 35 years and above the age of 70 years at any time during his/ her term in office. However, within the overall limit of 70 years, as part of their internal policy, individual bank’s Boards are free to prescribe a lower retirement age.
The person shall have a combined experience of at least eight years at the middle / senior management level in the banking sector (including the experience gained in the concerned UCB) or non-banking finance companies engaged in lending (loan companies) and asset financing.
Knowledge of regional language may be considered as an advantage.
Propriety Criteria-The person shall not
(i) be engaged in any other business or vocation;
(ii) be holding the position of a Member of Parliament or State Legislature or Municipal Corporation or Municipality or other local bodies;
(iii) be a director of any company other than a company registered under section 8 of the Companies Act, 2013;
(iv) be a partner of any firm which carries on any trade, business or industry;
(v) have substantial interest in any company or firm as defined in Section 5(ne) read with section 56 of the Banking Regulations Act, 1949;
(vi) be a Director, Manager, Managing Agent, partner or proprietor of any trading, commercial or industrial concern;
(vii) be of unsound mind and stands so declared by a competent court;
(viii) be an undischarged insolvent;
(ix) be convicted by a criminal court of an offence involving moral turpitude;
(x) be a director of any other co-operative bank or a co-operative credit society.
The person shall submit a self-declaration on personal integrity as per Annex II.
Tenure of the MD/WTD-The tenure of MD/ WTD shall not be for a period more than five years at a time subject to a minimum period of three years at the time of first appointment, unless terminated or removed earlier, and shall be eligible for re-appointment. The performance of MD/WTD shall be reviewed by the Board annually.
However, the post of the MD or WTD cannot be held by the same incumbent for more than 15 years. Thereafter, the individual will be eligible for re-appointment as MD / WTD in the same bank, if considered necessary and desirable by the board, after a minimum gap of three years, subject to meeting other conditions. During this three-year cooling period, the individual shall not be appointed or associated with the bank in any capacity, either directly or indirectly.
UCBs whose existing MD/CEO has completed a tenure of five years at the time of issue of this circular or subsequently, shall approach RBI either to seek re-appointment of the incumbent, if he/she is eligible, or for appointment of a new MD/CEO, within a period of two months from the date of issue of this circular.
Appointment of MD/WTD on temporary basis in UCBs shall be made as per the provisions of Section 10B(9) read with section 56 of the Act. Accordingly, the bank may, with the approval of the Reserve Bank, make suitable arrangements for carrying out the duties of MD/ WTD for a period of not exceeding four months. The bank shall complete the process of regular appointment within the period of the aforesaid four months.
Termination of MD/ WTD by UCB-In case a UCB decides to terminate the services of MD/ WTD before the expiry of tenure, it shall seek prior approval of the Reserve Bank, by submitting detailed reasons thereof along with the relevant documents and a Board resolution to that effect.
Miscellaneous-(i)MD/WTD shall be an ex-officio member of the BoD and may have voting rights in board meetings, if it is permissible under the provisions of the co-operative societies act.
(ii)MD shall be an ex-officio member of the Board of Management (BoM) constituted in terms of circular DoR (PCB).BPD.Cir.No.8/12.05.002/2019-20 dated December 31, 2019.
(iii)In public interest, the MD/ WTD shall execute the deed of covenants in the format annexed (Annex I). (iv)The appointment/ re-appointment/ termination of MD/ WTD shall be informed to the General Body in the ensuing Annual General Meeting.