What changed
This master circular consolidates and updates all previous instructions on board of directors for primary urban co-operative banks up to June 30, 2005. It reiterates that banks should have at least two directors with banking experience or relevant professional qualifications to ensure board professionalism.
What it means for you
Urban co-operative banks must strengthen their boards by inducting qualified professionals, enhancing governance and risk oversight. Banks need to align their by-laws to mandate such qualifications, ensuring boards can effectively supervise management and comply with RBI guidelines.
What you must do
- Review your bank's by-laws to include provision for at least two directors with banking experience or professional qualifications like chartered accountancy with bank audit experience.
- Ensure all RBI and government circulars are circulated to every board member and placed before the board for action.
- Adopt and enforce a proper loan policy with board oversight, following the dos and don'ts outlined in the circular.
- Acknowledge receipt of this master circular to the concerned RBI regional office.
Who it affects
Chief Executive Officers of all Primary (Urban) Co-operative Banks, Board of Directors of urban co-operative banks, State/Central Government registrars of co-operative societies
What are the minimum qualifications required for directors on the board of an urban co-operative bank?
The board should have at least two directors with suitable banking experience at middle/senior management level or relevant professional qualifications such as chartered accountants with bank accounting/auditing experience.
Who is ineligible to become a director of a primary urban co-operative bank?
Persons engaged in money lending, financing, or investment activities (as individuals or through entities), and those convicted of criminal offences including moral turpitude are ineligible as per clause b (ii) of model by-law no.9 and/or co-operative societies act provisions.