In a strongly worded letter to the Reserve Bank of India,Sahakar Bharati officials have opposed the diktat of the regulator on the issue of the constitution of BoM in the urban cooperative banking sector.
Singed by its President Jyotindra Mehta, Gen Secretary Dr. Uday Joshi and Convenor, UCB Cell Sanjay Birla the letter says “We strongly feel that compulsion to form BOM at this stage is neither necessary nor desirable as it will neither help the Sector nor the Regulator in anyway. This half-baked concept should not be forced on the UCB Sector.”
The letter argues that over the last several years, the UCB Sector has posted satisfactory progress and the Board of Directors have delivered positive performance. Therefore RBI must withdraw the proposed guidelines for the formation of BOM, andact on priority basis on various issues articulated by Sector from time to time.
Sahakar Bharati also reminds RBI of repeatedly raising the bogey of Regulatory Discomfort. “This is not in keeping
Exposing the bias of the RBI the letter argues the fact that the Constitution of BOM shall be a mandatory condition for obtaining regulatory approval for expansion of area of operation and opening of new branches by existing UCBs is unfortunate.
It also reminds RBI of its earlier attempt to derail the co-op movement by notification on the issue of conversion of large well managed Urban Cooperative Banks into Commercial Banks and Smaller UCBs into Small Finance Banks.
“Though, the push is cloaked under the garb of being voluntary, the arm twisting is most evident from the fact that they are threatened with curbs on growth, diversification and expansion, if they remained in the Co Operative fold”, the letter reminds.
The proposed BOM is like any other Committee of the BOD. Therefore, calling it BOM rather than a Committee of BOD sounds like instituting another Parallel Layer engaged in similar functions. This will result induplication, consequent delays and disharmony in the overall working of the UCB Sector, the letter says.
Sahakar Bharati also mentions other letters written in the past on the issue including letters dated 9th May, 2016 and 17th April, 2018 addressed to Dr Raghuram Rajan and Dr Urjit Patel respectively. It also reminds RBI of its strength by saying “we introduce ourselves as all India Organisation committed to promote Co-operative Movement in the Country. We are the largest non-governmental organisation with Units in over 400 Districts and more than 20,000 Co-operatives from all Sectors are linked to Sahakar Bharati.