With a view to instill professionalism in the working of the Urban Co-operative Banks (UCBs) and revive the potentially viable UCBs in the state, the Orissa government has signed a memorandum of understanding (MoU) with the Reserve Bank of India (RBI).
The secretary, co-operation department of the Orissa government, Taradatt and executive director, RBI, V S Das signed the document yesterday. The MoU with the state government was necessitated as the state government administers the Orissa Co-operative Societies Act, 1962 and is the regulator of the UCBs under the Banking Regulation Act 1949.
As per the MoU, the Reserve Bank of India will constitute a State Level Task Force (TAFCUB ) for UCBs, headed by of the regional director of RBI. It will be co-chaired by the Registrar of Co-operative Societies (RCS), Orissa and will accommodate representative of the state government, representative from the Central office of the urban bank department of the RBI, representatives each from the state and the national union of the UCBs. This task force will identify and draw up time bound action plan for revival of the potentially viable UCBs. Besides, it will facilitate the human resources development and information technology initiative in the UCBs. On its part, the state government will introduce a long term audit report for statutory audit and will modify the audit rating models in alignment with the gradation system which has been adopted by the RBI for all the UCBs.
The state government will also provide statutory audit by the Chartered Accountants (CAs) appointed in consultation with RBI for UCBs having deposits of more than Rs 25 crore and special audit by CAs if required by the RBI. The Orissa government will also put in place ‘fit and proper’ criteria for the appointment of the chief executive officer (CEO) of the UCBs based on the guideline of the bank.
It may be noted, the couple of months back, the Central Bank had suggested the state government to appoint experts in the board of the co-operative banks in the state. Importantly, the Orissa government and the RBI have agreed that the regional director, RBI and RCS will enter into a MoU stipulating broad parameters to be taken by the parties for the implementation of the recommendations of the TAFCUB.
The proposed MoU will provide for the consultation by the RBI with the RCS before the cancelling or refusing the license under banking Regulation Act, 1949. The RCS will have to comply without delay, any requisition by the Central Bank for supersession of the board for winding up any UCB. “The MoU will help to reduce the governmental interference in the UCBs and help to bring in professionalism in the day to day management of the UCBs”, Tatadatt, secretary, co-operation, Orissa government told Business Standard. Orissa has 14 UCBs and the financial condition of these banks is in bad shape. Meanwhile, the RBI has constituted a State level Task Force for Urban Co-operative Banks (TAFCUB) for Orissa. Kaza Sudhakar, regional director (Orissa), Reserve Bank of India, is the Chairman of the taskforce. K.C.Mohanty, Registrar of Cooperative Societies (RCS), Government of Orissa is its co-chairman.
The first meeting of the TAFCUB is expected to be held soon, RBI sources said. The Reserve Bank of India will also be assessing the training, computerization needs of the UCBs in the state with the objective of upgrading their human resources skills and technological infrastructure. This is expected to improve the operational efficiency of the UCBs and quality of management information systems.
