In a crackdown on political interference, the Reserve Bank of India has barred MPs, MPs and members of municipal corporations or other local bodies from holding the position of chief executive (MD) or full-time director (WTD) in urban cooperative banks.
These guidelines apply to all primary (urban) cooperative banks (UCBs). The RBI had exempted UCBs with the size of deposits below Rs 100 crore from the requirement to seek prior approval from the Reserve Bank for the appointment/renewal/termination of the appointment of MDs or WTDs.
According to the ownership criteria, the person to be appointed MD or WTD must not be engaged in any other business or vocation; shall not hold the office of Member of Parliament or State Legislature or municipal or municipal corporation or other local bodies; and must not be a director of any company other than a company registered under Section 8 of the Companies Act 2013.
In addition, he must not be a partner in a company that carries on a trade, business or industry; must not have a substantial interest in a company or business as defined in section 5(ne) read together with section 56 of the Banking Regulation Act 1949; and must not be a director, manager, managing agent, partner or owner of a commercial, commercial or industrial enterprise.
In addition, the person must not be alienated and is thus declared by a competent court; must not be an undischarged insolvent; must not be convicted by a criminal court for an offense involving moral turpitude; and must not be a director of another cooperative bank or cooperative credit society. The person must submit a personal integrity self-declaration form.
Although exempt UCBs are not required to obtain prior approval, they are required to formulate a board-approved policy based on all other provisions of these instructions for appointment/renewal/termination of term. of MD or WTD.
Such banks should immediately report the appointment/reappointment/termination of MD or WTD to the respective regional offices (Supervisory Department, Central Office, in case of UCBs under the jurisdiction of Mumbai office) of the Reserve Bank .
UCBs will review the Fit and Proper status of existing MDs in accordance with these instructions and confirm, with Board approval, to the relevant regional office within two months from the date of issue of the circular.
In the event that the current DM does not meet the prescribed fit and proper criteria, UCB will immediately initiate the process of appointing a new DM. If a UCB has appointed a WTD, the bank must follow the same procedure to comply with these instructions.
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