Urban Co-Operative Banks Urged By Shaktikanta Das To Enhance Governance
Reserve Bank Governor Shaktikanta Das has called on the directors of Urban Co-operative Banks (UCBs) to reinforce their governance practices, focusing on compliance, risk management, and internal audit. Das highlighted that strong governance is crucial for maintaining the stability of individual banks.
Reserve Bank made these remarks during a conference for directors of Tier 3 and 4 UCBs in the Mumbai Zone. While the UCB sector has shown improved financial performance overall, certain individual entities still face concerns and vulnerabilities. The governor stressed the importance of UCBs enhancing their financial and operational resilience to contribute to the stability of the financial and banking sectors.
Das emphasised five key aspects for the functioning of boards: directors possessing adequate skills and expertise, forming a professional board of management, ensuring diversity and tenure of board members, promoting transparency and participation in board discussions, and facilitating the effective operation of board-level committees.
The governor also highlighted the board's role in maintaining robust credit risk management, including stringent underwriting standards, vigilant post-sanction monitoring, timely identification and mitigation of potential stress, rigorous follow-up on major non-performing asset (NPA) borrowers for recovery, and maintaining sufficient provisioning.
The conference was attended by deputy governors M. Rajeshwar Rao and Swaminathan J., along with executive directors representing various departments of the RBI. The Reserve Bank plans to organise similar conferences for directors of Urban Cooperative Banks in other regions of the country.
