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RBI proposes Board of Management for all urban co-op banks

Published on June 27, 2018
To protect the interests of depositors and also overcome constraints imposed by dual regulation, the RBI has proposed the constitution of a board of management (BoM) in every urban cooperative bank (UCB) in addition to the board of directors (BoD).
  • The Board of Management (BoM) will be setup in all Urban Co-operative Banks (UCBs) having deposits of over Rs 100 crore within one year to strengthen governance and promote professional management but banks having deposits less than Rs 100 crore may constitute BoM within 2 years.
  • BoM will be in addition to the Board of Directors (BoD).
  • The 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.

Duties & Functions of the BoM:

  • BoM will look after all administrative functions of UCBs as spelt out in respective Co-operatives Act.
  • It will be responsible for credit, risk and liquidity management of UCBs.
  • It will consider loan proposals, recommend action for recovery of bad loans, implement sound internal controls and oversee compliances, among others.

Structure of BoM:

  • BoM will be constituted by BoD. 
  • BoM will have minimum of 3 members in UCBs having deposit size up to Rs 100 crore and 5 members in UCBs having deposit size up to Rs 100 crore.
  • The 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 two members outside from BoD.

Expertise that is looked for in the BoM:

50% of the members of BoM will consists of persons having special knowledge or practical experience in respect of one or more of the following matters:
  • Accountancy
  • Agriculture
  • Rural Economy
  • Banking
  • Co-operation
  • Economics
  • Finance 
  • Law
  • Small Scale Industry
  • Information Technology

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