Co-op banks told to set up management boards

The co-operative banking sector in India is facing three major issues and the sector is not able to utilise its full potential, said the Reserve Bank of India Deputy Governor R. Gandhi.

Mr. Gandhi, who was addressing a gathering at the Silver Jubilee Celebrations of National Institute for Rural Banking, said lack of corporate governance and professionalism, reluctance to adapt to technology, decline in co-operative character were the major issues faced by the co-operative institutions in the country.

“Today, most of the co-operative organisations are losing that co-operative nature. The institutions are facing some major issues which is preventing from utilising the full potential of co-operative banks in the country,” said Mr. Gandhi.

“Even with a large number of co-operative banks in the country, the total asset size and their share in the Indian banking sector is not more than 5 per cent. This means the true potential of these co-operative institutions has not been fully achieved,” added Mr. Gandhi. He also said to improve professionalism in urban co-operative banks, Y.H. Malegam committee had given certain recommendations including establishing a Board of Management, consisting of persons with professional skills. “The RBI has started insisting it and now Urban Co-Operative Banks have started appointing them. However, there are more than 100 banks which have not appointed any professionals.”

Yes Bank

When asked whether the RBI was looking into the Yes Bank boardroom tussle, the RBI Deputy Governor said, “The matter is in the court and the bank will have to follow court's decision.”