The latest Circular from RBI on the issue of Honorary Designations in Urban Cooperative Banks, is sure to affect some of the high profile co-operators including H K Patil and Mukund Abhyankar.
In its letter to UCBs, the RBI says “It has been observed during the course of supervisory reviews that some of the Urban Co-operative Banks (UCBs) have adopted the practice of creating honorary designations (remunerated or otherwise)/conferring titles at Board level, such as Chairman Emeritus, Group Chairman, etc., which are not recognised in applicable statutes or regulations.”
While such positions/titles may be indicative of certain privileges/rights for the incumbent to access all board materials and participate in board/committee meetings, enforcing liability or obligations on such person may be difficult, RBI notes.
It further says “Such positions may be seen as creating conflicts of interest as well as creation of a parallel or
shadow authority impeding effective and independent functioning of the legally constituted board in the best interest of all its stakeholders.”
UCBs are directed not to create any honorary positions/titles at Board level or confer such titles that are non-statutory in nature and to eliminate any such existing position/titles within one year from date of this circular, underlines the RBI saying these directions are issued under Section 35A and Section 36(1)(d) of the Banking Regulation Act, 1949 (AACS).
Earlier, we had carried a story on the issue titled “What a fall! Chairman Emeritus Bung becomes Vice-Chairman!” when the then Chairman Emeritus Ramesh Kumar Bung of AP Mahesh Bank was made the Vice-Chairman of the same entity- AP Mahesh Bank a couple of years ago.
A complaint was lodged with the Central Registrar on the blatant misuse of the designation “Chairman Emeritus”. The argument was simple- there is no mention of Chairman Emeritus in the Bye-laws of the co-op bank or in the MSCS Act. The position is created after passing the resolution in General Body.
Many co-operators have also objected to this practice of “accommodating” the seniors by designating them as emeritus. “There is no need for creation of additional posts; such Chairman Emeritus have neither statutory power and nor well-defined duty; They are not ready for let-go even when their terms are over”, they argued.
There are many Multi-State Cooperative Banks including Kalupur Commercial Cooperative Bank, Cosmos Cooperative Bank, Visakhapatnam Cooperative Bank and others, which have created the position of Chairman Emeritus. Even the apex body of UCBs, Nafcub has created the position for H K Patil in their last election.
