RBI prescribes qualifications for general managers, full-time managers of urban cooperative banks

RBI prescribes qualifications for doctors, full-time directors of urban cooperative banks

Highlights

  • UCB MDs and WTDs will also need to be professionally qualified for the role
  • The person must not be under 35 and over 70 at any time during their tenure
  • Within the overall limit of 70 years, as part of their internal policy, the boards of directors of each bank are free to prescribe a lower retirement age.

New Delhi: The Reserve Bank of India (RBI) issued a notice on June 25 prescribing rules for the appointment of heads and full-time directors (WTDs) of urban cooperative banks (UCBs). The central bank harmonized the appointment rules with those of private banks.

In accordance with the RBI Circular, the tenure of the Director General (MD) / WTD shall not exceed five years at a time, subject to a minimum period of three years at the time of the first appointment, unless he be terminated or revoked earlier. , and will be eligible for re-election. The performance of the MD / WTD should be reviewed by the board annually. Also, the position of MD or WTD cannot be held by the same incumbent for more than 15 years.

Note that directors of public sector banks are typically appointed by the government for a three-year term or until the appointee turns 60, whichever comes first. On the other hand, managing directors of private banks are appointed by their respective boards of directors, subject to the approval of the RBI, and can hold the position until the age of 70.

From now on, UCBs must ensure that the following “fit and proper” criteria are met by the person appointed MD. The Chief Executive Officer will function under the general supervision, direction and control of the Board of Directors (CA).

The person must not be under 35 and over 70 at any time during his tenure. However, within the overall 70-year limit, as part of their internal policy, the boards of directors of each bank are free to prescribe a lower retirement age, the RBI said.

UCB’s MDs and WTDs will also need to be professionally qualified for this role, RBI said. The person should be a graduate, preferably with a qualification in banking / cooperative banking, a chartered accountant or accountant, an MBA (finance) or a postgraduate degree in any discipline. They should also have a combined experience of at least eight years at middle / senior management level in the banking sector, including experience gained in the relevant UCB, or in non-bank financial companies engaged in lending ( loan companies) and asset finance.

The person should not be engaged in any other business or vocation or serve as a member of parliament or state legislature or municipal corporation or municipality or other local bodies. They must also not be a director of a company other than a company registered under Article 8 of the Companies Act 2013 or be a partner of a company carrying on trade, business or industry, the RBI said.

The central bank further added that UCBs will need to establish a Nomination and Remuneration Committee (NRC) made up of three directors chosen from the board of directors and appoint one from among them as the chairman of the NRC. All three NRC members must be present at each meeting. In the event of the absence of a member appointed to the CNR, the Board appoints any other director in his place to ensure a quorum. When the NRC is established, the Council also decides on its mandate.

Unscheduled UCBs with a deposit size of Rs 1,000 crore and above and all scheduled UCBs must submit the MD / WTD nomination proposal to the RBI central office in Mumbai.

In the event that UCB decides to terminate the services of an MD or WTD before the expiration of the mandate, it must seek the prior approval of the RBI, submitting the detailed reasons for it as well as the relevant documents and a Council resolution to that effect, RBI added. The bank must make appropriate arrangements to perform the duties of MD / WTD for a period not exceeding four months. He also completes the regular appointment procedure within these four months.

MD / WTD will be an ex-officio member of the board and may have the right to vote at meetings of the board of directors, if this is permitted under the provisions of the law on cooperative societies. In addition, MD will be an ex officio member of the Board of Directors (BoM), RBI said.

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