RBI prescribes ‘fit and proper’ qualification for MDs and WTDs of urban cooperative banks

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On June 25, the Reserve Bank of India (RBI) formulated rules for the appointment of managing directors (MDs) and whole-time directors (WTDs) in urban cooperative banks (UCB).

India’s central bank has prescribed certain educational qualifications and ‘fit and proper’ criteria for MDs and WTDs of primary urban cooperative banks.

Members of Parliament (MPs), representatives of municipal corporations and local bodies, people engaged in business, trade or having substantial interest in the company, Members of the Legislative Assembly (MLAs) are prohibited to hold such positions.

The MD/WTD must be a post graduate or have qualifications in finance discipline. The person could either be a chartered/cost accountant, MBA in Finance or have a diploma in banking or cooperative business management.

According to the notification, the person should have a combined experience of not less than eight years at the middle/senior management level in the banking sector including the experience gained in the concerned UCB or non-banking finance companies (NBFCs) such as loan companies and asset financing.

On the subject of the tenure of appointment, the person can be appointed for a maximum of five years and will be eligible for re-appointment but they cannot hold positions for more than fifteen years. After that, if required, the person may be re-appointed after a cooling period of three years.

To be eligible for the post, the minimum age of the person should be below 35 years and not above than 70 years.