 "Panel recommends professional directors on board of urban co-operative banks: R Gandhi")
The high level committee constituted by the Reserve Bank of India to re-examine and recommend more efficient working ways for the urban cooperative banking (UCB) sector has suggested more professional directors on board, said R Gandhi, Deputy Governor of RBI.
“UCBs still have some issues as far as governance is concerned. This is being accepted by bringing in the concept of board for management, as was recommended by the YH Malegam committee. We have also insisted for professional directors on the board.,” said Gandhi, who is chairing the board.
The recommendations made by the board have already been submitted. Apart from this, the board has also suggested a roadmap on how the UCBs can convert themselves into a universal bank.
“There is no bar from our side. Today, company's act allows an entity to become a bank but that provision is not there in the laws that govern co-operative banks. We have recommended that to the government,” said Gandhi.
He added that the UCBs have managed to consolidate their position and improve their asset quality and as a result in the next phase they are expected to get on to the growth path. Currently, the Gross Non Performing Assets (NPA) of UCBs is less than 5% while Net NPA is at 3%, which puts them at par with several public sector banks.
Gandhi believes that despite the new niche banks coming in the system UCBs will remain unaffected.
“UCBs are small community banks and have a limited operations. Most of the time they have their own committed clientele for ages. They are not growing much but at a low level equilibrium. It is very unlikely that if a payment bank or a small finance bank come that they will lose their business.”