RBI tightens CEO norms for cooperative banks – Times of India

MUMBAI: Taking a tough stance on the governance of urban cooperative banks, the Reserve Bank of India (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 has been appointed without its approval to review the fit and proper status of the existing MD in terms of present directions. RBI guidelines require that the MD should be a graduate and preferably have additional qualifications such as a diploma in banking, chartered cost account, or post-graduation in any discipline.
The minimum age for a CEO has been set at 35 years and maximum age at 70 with at least eight years’ experience in the middle or senior management level in the banking sector. Also, the post of the MD and whole-time director cannot be held by the incumbent for more than 15 years.
PMC moratorium for 6 more monthsThe RBI on Friday extended the moratorium on PMC Bank by another six months.
“In response to the expression of interest (EOI) dated November 3, 2020, floated by PMC Bank for its reconstruction, certain proposals were received. After careful consideration, the proposal from Centrum Financial Services (CFSL) along with Resilient Innovation (BharatPe) has been found to be prima facie feasible,” the RBI said.
It added that considering the time required for completion of various activities involved in the process, it is considered necessary to extend the direction up to December 31, 2021.

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