Sahakar Bharati held an emergency Managing Committee meeting in Mumbai on 2nd January, 2020 on the backdrop of RBI Press Release regarding mandatorily constituting Board of Management (BOM) by UCBs having Deposits of Rs 100 crs and more.
It was unanimously resolved to appeal to RBI to reconsider its guidelines on the mandatory provision of BOM by UCBs of large deposit size. Later it also penned a letter to RBI, a copy of which is with Indian Cooperative.
In the letter Sahakar Bharati has reminded the RBI that the entire UCB sector including Sahakar Bharati, National and State Federations and Associations across the Country have strongly opposed the concept as it is impractical.
“With BOM being accountable to RBI, and elected Board being accountable to Stakeholders, it is feared that two centres of decision making will emerge resulting in friction and disharmony, consequently affecting the working of the UCBs”, the letter asks pertinently.
The letter has been signed by Sahakar Bharati President Ramesh Vaidya and its National General Secretary Dr Uday Joshi. “Presently, as per the RBI guidelines mandatorily two Expert Directors are already functioning on the Board of Directors of UCBs. Appointment of BOM is mere duplication and can result in major disruption in the decision-making process of the UCBs”, they argue.
The letter reminds RBI that Sahakar Bharati has always been demanding that the Banking Regulation Act be amended to give full Regulatory powers to RBI to protect the interests of all Stakeholders, particularly, Depositors.
“We firmly believe that the purpose of safeguarding the interests of Depositors will not be served by constituting BOM. Sahakar Bharati is of the firm opinion that the ultimate governance of UCBs should be fully vested with the RBI”, “the letter says.
“The Resolution also unanimously appealed to the Hon Finance Minister, in the ensuing Budget Session, to move Bill to amend the Banking Regulation Act to give full Regulatory powers in respect of UCBs”, the Managing Committee demanded.