On a spate of reports about RBI penalising urban co-operative banks regardless of reason, RBI’s Central Board member and an ardent supporter of co-op banks, Satish Marathe has exhorted UCBs to improve their governance.
In the month of September alone RBI has either penalised or extended directions on a number of urban co-op banks. Media, including Indian Cooperative have reported such cases unfailingly. Marathe feels “there is little use highlighting penalties being imposed by the RBI.”
Some banks which have been penalised recently include Swasakthi Mercantile Cooperative Bank, Shikshak Sahakari Bank, Sutex Cooperative Bank, Sarvodaya Cooperative Bank and others.
There are many co-op banks which have failed to improve their conditions and continue to remain under RBI’s Direction. In September alone RBI extended directions on many banks including People’s Cooperative Bank, Kanpur, Sikar Urban Cooperative Bank, Adoor Cooperative Urban Bank.
Reacting to such news Marathe wrote on social media “High time for Sahakar Bharati, Nafcub and State Federations to undertake nationwide Programmes to sensitize UCBs – Boards & Management to improve Governance/Compliance.”
Talking to Indian Cooperative Satish Marathe said the time has come for banks to be extra careful as the new amended BR Act is a wake-up call for them to introduce “Robust Risk Management Architecture, Internal Systems & Controls, remain adequately Well Capitalised, and Improve the culture of Compliance.
Feeling such needs more so following the recent amendment in the DICGC Act, Marathe further said if 98% of depositors are to be given their money within 90 days, banks will have little or no manoeuvring space. “It is on the strength of accumulated deposits in a troubled bank that further revival or resolution plans are set in motion”, he added.
UCBs need to be extra vigilant by strengthening their monitoring system- be it audit or cyber security as any major crisis in the bank henceforth may lead to their closure, felt Marathe hinting that the so-called RBI penalties are rather small stuff.
Risk management also assumes more importance now than in the past, said Marathe, adding that except the Saraswat Bank and a few more, most of the UCBs are still lagging behind in this aspect. RBI introduced Risk Management more than a decade ago and UCBs should focus on it on an urgent basis, he felt.