On August 30, the Reserve Bank of India (RBI) recommended directors of urban cooperative banks (UCBs) to tighten their governance procedures, particularly the three 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 practises,” RBI Governor Shaktikanta Das said at a gathering of directors on the boards of Tier 3 and 4 UCBs in the Mumbai Zone.
The central bank said in a release that the governor focused on five aspects of how boards should operate: the need for directors to have the necessary skills and experience, the formation of a professional board of management, member tenure and diversity, the openness and participation of board meetings, and the efficiency of board-level committees.
According to the press release, the deputy governors M Rajeshwar Rao and Swaminathan J as well as executive directors from the departments of supervision, regulation, and enforcement of the RBI were also present at the conference.
The governor also stressed the significance of the bank board’s participation in upholding strict credit risk management practises, such as strong underwriting standards, efficient post-sanction monitoring, prompt identification and relief of developing stress, strict follow-up of sizable NPA borrowers for efficient recovery, and maintenance of adequate provisioning.