What changed
RBI observed that some Multi-State UCBs have not adopted the 'fit and proper criteria' for CEO appointments, or are not adhering to the Government of India's August 2011 guidelines. This circular reiterates that these criteria are mandatory and must be followed in letter and spirit.
What it means for you
Banks must ensure their board policies explicitly include the prescribed fit and proper criteria for CEO selection. Non-compliance could lead to regulatory action. This reinforces governance standards and aligns with TAFCUB recommendations to prevent unqualified appointments.
What you must do
- Review your bank's current CEO appointment policy to confirm it includes the Government of India's minimum eligibility criteria from August 2011.
- Ensure all future CEO appointments strictly adhere to the prescribed fit and proper criteria.
- Document compliance and maintain records of adherence for RBI inspection.
- If criteria are missing, update board-approved policy immediately.
Who it affects
Multi-State Urban Co-operative Banks, Boards of Directors of Multi-State UCBs, Chief Executive Officers of Multi-State UCBs
What is the source of the fit and proper criteria for CEOs of Multi-State UCBs?
The criteria were prescribed by the Government of India, Ministry of Agriculture, in circular No R-11017/17/2011-L&M dated August 16, 2011, based on TAFCUB recommendations.
What should a bank do if it has not yet adopted these criteria?
The bank must immediately adopt the fit and proper criteria in its board-approved policy and ensure all CEO appointments comply with the Government of India's guidelines.
Does this circular apply to all Urban Co-operative Banks?
No, it specifically applies to Multi-State Urban Co-operative Banks registered under the Multi-State Co-operative Societies Act.