What changed
Earlier, UCBs were required to have at least two directors with banking experience or Chartered Accountants having bank accounting/auditing experience. Now, the scope has been enlarged to include professionals qualified in law, accountancy, or finance as eligible 'professional directors'.
What it means for you
UCBs will find it easier to comply with the board composition requirement as the pool of eligible professionals has widened. This move aims to strengthen governance by bringing diverse expertise onto boards, but banks must amend their bye-laws to reflect the new definition and ensure continuous compliance.
What you must do
- Amend your bank's bye-laws to incorporate the expanded definition of professional directors as per the circular.
- Ensure your board always has at least two directors meeting the new criteria (banking experience, or qualification in law, accountancy, or finance).
- Acknowledge receipt of this circular to your concerned RBI Regional Office.
Who it affects
Primary (Urban) Co-operative Banks (UCBs), Board of Directors of UCBs, Compliance and governance teams of UCBs
What qualifications now count as 'professional director' under this circular?
Professional directors can be persons with suitable banking experience at middle/senior management level, or those with professional qualifications in law, accountancy, or finance.
Do we need to amend our bye-laws immediately?
Yes, the circular advises UCBs to initiate steps to amend bye-laws to incorporate the new provision and ensure compliance with the requirement of having at least two professional directors at all times.