RBI extends deadline for Urban Co-Ops by 6 months

The Reserve Bank of India has extended the timeline for constitution of Board of Management (BoM) by Urban Cooperative Banks (UCBs) by six months till June 30, 2021.

The central bank has conveyed the extension in the timeline to state UCB Federations, including the Gujarat Urban Co-operative Banks Federation Ltd (GUCBFL).

While welcoming the breather for UCBs, Jyotindra M Mehta, Chairman, GUCBFL, observed that since the Banking Regulation Act has been amended, conferring greater powers on the Reserve Bank of India (RBI) in dealing with cooperative banks, the BoM requirement should be done away with.

“Now we (UCBs) are under full control of RBI. So, where is the need for BoM? Almost 60 per cent of our Banks are very small. They can’t afford the two power centre structure (Board of Directors and BoM),” Mehta, who is also President of the National Federation of UCBs & Credit Societies (NAFCUB), said.

As per RBI’s guidelines on constitution of BoM, issued on December 31, 2019, the BoM shall comprise persons with special knowledge and practical experience in banking to facilitate professional management and focused attention to the banking related activities of the UCBs through appropriate amendments to their bye-laws.

“UCBs with deposit size of Rs. 100 crore and above shall constitute BoM which will also be a mandatory requirement for allowing such banks to expand their area of operation and open new branches,” the guidelines said.