BackRBI urges urban cooperative banks to strengthen governance
Governor Shaktikanta Das highlighted five important aspects that UCBs are required to focus on
PremiumThe Reserve Bank of India (RBI) has called on the directors of urban cooperative banks (UCBs) to enhance their governance practices, focusing on risk management, compliance and internal audit.
“The governor stressed that the quality of governance was the most important aspect in ensuring stability of individual banks and urged UCB directors to further strengthen governance practices," RBI said in a press note on Wednesday.
The central bank organized a directors’ conference for tier three and four urban cooperative banks of Mumbai zone.
Governor Shaktikanta Das highlighted five important aspects that UCBs are required to focus on: adequate expertise and skills for directors, forming professional management boards, board member diversity and tenure, transparent and participatory board discussions, and effective functioning of board-level committees, RBI said.
The event was also attended by RBI’s deputy governors M. Rajeshwar Rao and Swaminathan J., as well as the executive directors of RBI’s departments of supervision, regulation and enforcement, besides other senior officials.
Das spoke about the importance of the involvement of bank boards in upholding rigorous credit risk management, including robust underwriting standards, effective post-sanction monitoring, timely recognition and mitigation of incipient stress, rigorous follow-up of large non-performing asset (NPA) borrowers for effective recovery, besides maintaining adequate provisioning.
He also urged the boards to become proactive in asset liability management and necessity of managing liquidity risk in a more systematic manner.
“He stressed that the board’s role is pivotal in establishing a robust information technology and cybersecurity infrastructure, as well as availability of requisite skills at the bank level," the central bank said in the press note.
The central bank governor met the directors on boards of public sector banks as well as private sector lenders in two separate conferences in May.
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