Page 15 - Banking Finance October 2023

Co-Operative Bank

News

RBI cautions UCB directors Tier-III consists of Urban Coop Banks supporting pillars of Compliance, Risk
with deposits between Rs 1,000 crore Management and Internal Audit.
against camouflage of fi- to Rs 10,000 crore. It has adopted a four-tiered regulatory

nancial position The RBI has started engaging with the framework for the categorisation of
Flagging the need to enhance integrity directors of its Regulated Entities func- UCBs, given the heterogeneity in the
and financial profile, the Reserve Bank tioning in different segments of the fi- sector.
of India (RBI) cautioned directors of nancial system.
Urban Cooperative Banks (UCBs) RBI imposes monetary pen-
Two separate conferences were held
against the use of innovative account- with directors on boards of Public Sec- alty on four cooperative
ing practices to camouflage the actual tor Banks and Private Sector Banks in
financial position. banks for rule violations
May 2023.
UCBs have to strengthen their finan- Going forward, the central bank would RBI imposed monetary penalties on
cial and operational resilience so as to be convening similar conferences of four cooperative banks for rule viola-
contribute to the overall financial and tions. The banks that have been
banking sector stability. While the UCB directors on boards of other UCBs in penalised are the Baramati Sahakari
sector has displayed improved financial other regions of the country. Bank, the Becharaji Nagarik Sahakari
performance at an aggregate level in There was also a need for the board's Bank, the Waghodia Urban Co-opera-
recent times, concerns and vulnerabili- involvement in upholding rigorous tive Bank, and the Viramgam Mercan-
ties are seen for certain individual en- credit risk management, including ro- tile Co-operative Bank, according to
tities. bust underwriting standards, effective the releases.
post-sanction monitoring, timely rec- The central bank has imposed a pen-
Addressing directors of select UCBs,
Shaktikanta Das, RBI governor, said ognition and mitigation of incipient alty of Rs 2 lakh each on Baramati
the role of directors was very signifi- stress. Sahakari Bank and Becharaji Nagarik
cant in ensuring the integrity and The board has a crucial role in the rig- Sahakari Bank, as mentioned in the
transparency of financial statements. orous follow-up of large NPA borrow- releases.
The RBI held a Conference of Directors ers for effective recovery, and main- Moreover, it has imposed a penalty of
on the Boards of Tier-III and Tier-IV taining adequate provisioning, he said. Rs 5 lakh each on the Waghodia Urban
UCBs in the Mumbai Zone. Co-operative Bank and the Viramgam
The Governor stressed that the qual-
The Governor inaugurated the confer- ity of governance was the most impor- Mercantile Co-operative Bank.
ence on the theme 'Governance in tant aspect in ensuring the stability of Meanwhile, the RBI has penalised
Banks - Driving Sustainable Growth and individual banks and urged the direc- Becharaji Nagarik Sahakari Bank as the
Stability'. Tier-IV UCBs are entities with tors of UCBs to further strengthen gov- bank breached prudential inter-bank
deposits above Rs 10,000 crore, and ernance practices, especially the three counter-party exposure limits.

BANKING FINANCE | OCTOBER | 2023 | 15