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January 25
Urban Co-operative Banks (UCBs) need to fix responsibility for the wrong actions of their officers, managers, directors and administrators and recover the penalty that the Reserve Bank of India (RBI) imposesfrom them, according to Satish Marathe, Founder-Member, Sahakar Bharati.
His observation came in the backdrop of RBI announcing on Monday that it had imposed a penalty on eight Co-operative Banks, including seven UCBs. The penalty has been imposed for non-compliance with provisions or contravention of certain directions issued by RBI.
“High time for UCBs to tone up governance and compliance culture… Why should an UCB suffer financially for wrong decisions of its officers, managers, directors and administrators?” said Marathe, who is also a Director on the Central Board of RBI.
Sahakar Bharati is an umbrella body of co-operative institutions in the country.
Creating a poor image
Marathe observed that penalties at regular intervals on co-operative banks reflect poorly on their working and consequently tarnishes the image of the entire co-operative banking sector among the depositors, general public, regulators, judiciary, among others.
In FY21, there were 61 instances of penalty imposition by RBI against 52 in FY20. Out of this, 43 (9 in FY20) were in the case of co-operative banks, with the total penalty being ₹3.9 crore (₹7.4 crore), as per RBI’s Report on Trend and Progress of Banking in India 2020-21.
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