Abbreviations:
BoM - Board of Management
UCB - Urban Cooperative Banks
BoD - Board of Directors
RBI proposed to set up BoM in all UCBs having deposits of over Rs. 100 Crore within 1 year to strengthen governance and promote professional management in these banks
BoM - Board of Management
UCB - Urban Cooperative Banks
BoD - Board of Directors
RBI proposed to set up BoM in all UCBs having deposits of over Rs. 100 Crore within 1 year to strengthen governance and promote professional management in these banks
- BoM will be in addition to the BoD
- BoD will continue to be apex policy setting body and constitute various committees of board including BoM to assist it to carry out its functions
Key Facts:
Functions:
- BoM looks after all administrative functions of UCBs as spelt out in respective cooperatives Act.
- It is responsible for Credit, risk and liquidity management of UCBs.
- It considers loan proposals, recommend action for recovery of bad loans, implement sound internal controls and oversee compliances among others.
Composition:
- BoM is constituted by BoD
- BoM will have minimum of 3 members in UCB having deposit size up to Rs.100 Crore and 5 members in UCBs having deposit size above Rs.100Crore.
- Maximum number of members in BoM will not exceed 12.
- Not more than 50% of BoM members should be from BoD.
- Under all circumstances, BoM Should have atleast 2 members outside from BoD
Criteria:
- 50% of members of BoM will consist persons having special knowledge or practical experience in respect of one or more of following matters such as
- Accountancy, agriculture and rural economy, banking, cooperation, economics, finance, law, small scale industry, information technology and other matter the special knowledge useful to UCB.
Implementation:
Existing UCBs have deposit size exceeding Rs.100 crore will set up BoM within period of 1 year and banks less than it may constitute BoM within 2 years.
BACKGROUND:
- Expert committee on licensing new urban cooperative banks (2010) constituted under chairmanship of YH Malegam had recommended that BoM should be constituted in every UCB, in addition to BoDs.
- This was reiterated by High powered committee on UCBs headed by R.Gandhi constituted in January 2015 by RBI.
- Under the present legal framework, BoD of UCB performs both executive and supervisory roles and has responsibility to oversee functioning of UCB as cooperative society and as a bank.
