Shaktikanta Das asks urban co-operative banks to strengthen governance
economic development by providing last mile connectivity, Reserve Bank Governor Shaktikanta Das Wednesday urged the directors of UCBs to further strengthen their governance practices, especially the three supporting pillars of compliance, risk management and internal audit. “The quality of governance was the most important aspect in ensuring stability of individual banks and the directors of UCBs are urged to further strengthen governance practices," the RBI governor said at a conference of directors on the boards of Tier 3 and 4 UCBs in Mumbai Zone.
The RBI governor noted that while the UCB sector has displayed improved financial performance at an aggregate level in recent times, concerns and vulnerabilities are seen for certain individual entities. He highlighted the need for the UCBs to strengthen their financial and operational resilience so as to contribute to the overall financial and banking sector stability.
On the functioning of boards, Das emphasized five aspects - adequate skills and expertise of directors, constitution of a professional board of management, diversity and tenure of board members, transparent and participatory nature of board discussions, and effective functioning of board level committees, the RBI said in a release. The RBI governor also stressed the need for board's involvement 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 NPA borrowers for effective recovery, and maintaining adequate provisioning.
The conference was also deputy governors M. Rajeshwar Rao and Swaminathan J., along with executive directors representing the RBI’s
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