Cooperative banks: India

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Rules

Politicians as whole-time director in urban co-op banks

Prafulla Marpakwar, June 27, 2021: The Times of India

Over six months after the NDA government at the Centre amended the Banking Regulation Act, the RBI has issued a notification to provide for a ban on the appointment of MPs, legislators and members of local bodies as whole-time directors of urban cooperative banks, reports Prafulla Marpakwar.

Once appointed a wholetime director, a person cannot hold any position in any other bank or private firm. The person appointed should not have been convicted of an offence involving moral turpitude.

The notification provides for stringent rules for the appointment of the MD and CEO; the appointed person should be a graduate in economics, finance or banking. It was found that in several urban cooperative banks, MDs and CEOs are appointed on the basis of their political clout and lack the basic qualifications required to be in the banking sector. Now banks will have to examine if the MDs and CEOs have been appointed in accordance with the RBI notification. While most district central cooperative banks in the state are NCPcontrolled, urban cooperative banks are controlled by BJP, NCP and the Congress.

See also

Banking, India: I