BoM in UCB: A few welcome, majority oppose

Indian Cooperative has talked to Chairmen and CEOs of several Urban Cooperative Banks and noted their reaction to Reserve Bank of India proposing draft guidelines for their Boards of Management.

While some cooperators have hailed RBI’s move, some have hinted at opposing the draft proposal as they think it goes against the cooperative spirit.

Sunil Sathe, CEO, TJSB Sahakari Bank said now-a-days the business of each and every UCB is increasing and there is a growing professionalism in the activities of these banks. RBI’s proposal for creating BOM is commendable and we welcome this move.

Sathe felt “If we want to save the cooperative sector, professionalism is very important and it would help us in the long run. If we want to move ahead and compete with other players in the market we should adopt professional approach in our activities.”

Onil John Almeida, Chairman of Maharashtra based Bassein Catholic Cooperative Bank said “Our bank has welcomed the step of creating board of management in addition to board of directors. This will help the bank because professionals help the UCBs organize themselves better. “

Meanwhile, media reports say that the Maharashtra State Urban Cooperative Banks Federation has objected to the idea of a separate Board of Management (BoM) for UCBs and said this move will hamper the banking function of the UCBs as well as create dual centres of power.

News coming from Andhra Pradesh also suggest that the majority of UCBs have not liked the idea. Chalasani Raghavendra Rao, Chairman, Visakhapatna UCB felt “The draft proposal of Reserve Bank of India is against the cooperative spirit and the cooperators associated with Urban Cooperative Banks in Telangana and Andhra Pradesh would oppose this move.”

“Commercial banks being run by professionals are burdened with NPAs compared to Urban Cooperative Banks even when the former have boards consisting of professional peoples?” he asked- a view earlier expressed by Jyotindrabhai Mehta, senior cooperator.

RBI should withdraw the draft guidelines on BoM, Rao demanded.

CA Jagtap Pradeep, Chairman, Janaseva Sahakari Bank, Pune reacted “The 97th Constitutional Amendment provides for board of management but nothing has been done so far in this regard. As the draft guidelines have just been made public, it is too early for me to comment on them but I think it could be a good step if it is implemented properly. I am sure, it take the bank towards professionalism.”

It bears recall that RBI on Monday released the draft guidelines on Board of Management (BoM) for Primary (Urban) Cooperative Banks (UCBs). The guidelines suggest that every UCB should constitute a BoM, in addition to its Board of Directors (BoD).