In a notification issued to all the UCBs, RBI has asked these banks having deposit size of more than Rs 100 crore to immediately report the appointment, re-appointment or termination of appointment of MDs or Whole Time Directors (WTD) to respective Regional Offices of the RBI.
The exempted UCBs (Having deposit size less than Rs 100 cr) are not required to obtain prior approval. They are required to formulate a Board approved policy based on RBI’s directions on the issue.
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. The person shall not be engaged in any other business or vocation or be holding the position of a Member of Parliament or State Legislature or Municipal Corporation or Municipality or other local bodies, clarifies the RBI notification.
The tenure of MDs/ WTDs shall not be for a period more than five years. However, the post of MD or WTD cannot be held by the same incumbent for more than 15 years.
UCBs shall constitute a “Nomination and Remuneration Committee (NRC)” consisting of three directors from amongst the Board of Directors (BoD) and nominate one from among them as Chairman of the NRC.
The NRC shall undertake a process of due diligence to determine the ‘fit and proper’ status of a person being considered for appointment as MD/ WTD. The BoD may pass an appropriate resolution for forwarding the name(s) of the person/s from the panel recommended by the NRC for appointment as MD/ WTD.
In order to expedite the process of appointment, UCBs may submit a panel of at least two names in the order of preference to the Reserve Bank, four months before the expiry of the term of office of the present incumbent.
Non-Scheduled UCBs with a deposit size of Rs 1000 crore and above and all scheduled UCBs shall submit the proposal for appointment of MD/ WTD, along with the supporting documents to the RBI Head office.
Non-Scheduled UCBs with a deposit size of Rs 100 crore or above but below Rs1000 crore shall approach the Regional Office/Central Office for the requisite approval.
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.
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. MD shall be an ex-officio member of the Board of Management (BoM.
UCBs which have appointed CEO with the prior approval of the Reserve Bank in terms of the guidelines contained in the circular on Constitution of Board of Management may continue with the CEO so appointed till the completion of his / her tenure or for a period of three years from the date of initial appointment, whichever is earlier.
UCBs shall furnish ‘Fit and Proper’ status of the existing MD in terms of these directions and confirm the same, with the approval of BoD, to the concerned Regional Office within a period of two months from the date of issue of this circular. In case, the present MD does not satisfy the prescribed ‘Fit and Proper’ criteria, the UCB shall initiate the process for appointment of new MD immediately. If a UCB had appointed WTD, the bank shall follow the same procedure to comply with these directions, underlines the RBI notification.
All UCBs have been asked to obtain a deed of covenants from the present MD/ WTD who is found to be complying with these directions. RBI has also attached the format as an annexure in the notification.
RBI clarifies that the Managing Director shall function under the overall general superintendence, direction and control of the Board of Directors (BoD). The creation of the post of WTD and the functions that can be performed may be decided by the BoD and approved by the General Body of the bank. The WTD shall report to the Managing Director.
The UCBs shall ensure ‘fit and proper’ criteria are fulfilled by the person being appointed as MD/ WTD. The person shall be a graduate, preferably, with a qualification in banking/ co-operative banking, Chartered / Cost Accountant / MBA (Finance); or Post graduation in any discipline.
These directions shall come into force with immediate effect.
