RBI tightens CEO norms for urban cooperative banks

Mumbai: Taking a tough stance on the governance of urban cooperative banks, the RBI on Friday announced minimum qualifications and age limits for CEOs and whole-time directors of these banks as part of its ‘fit and proper’ criteria.

The rules gain significance considering that in many cooperatives the appointment is political, and the central bank is slowly tightening its grip over them. The RBI got the power to regulate cooperatives last year in June after the government issued an ordinance to bring 1,482 urban cooperative banks and 58 multi-state cooperatives under the central bank’s supervision. The new rules come in the wake of the collapse of several urban cooperative banks, the biggest being the Punjab and Maharashtra Cooperative (PMC) Bank where the CEO conspired with some members to divert funds to real estate developers.

The RBI has asked all cooperative banks where the CEO is appointed without its approval to review the fit and proper status of the existing MD in terms of present directions.