The direction requiring Urban Co-operative Banks (UCBs) to constitute a Board of Management (BoM) in addition to the existing Board of Directors (BoD) should be withdrawn by the Reserve Bank of India (RBI) in view of the government promulgating the Banking Regulation (Amendment) Ordinance, 2020, according to an industry body.
The National Federation of Urban Co-operative Banks and Credit Societies (NAFCUB) claimed that this regulatory requirement is impinging on the cooperative principles and also the provisions of the Constitution of India.
The RBI’s directive, issued on December 31, 2019, requires the BoD of UCBs with a deposit size of ₹100 crore and above to constitute a BoM within one year. This has been made a mandatory condition for opening of new branches / expansion of area of operation.
Constituting BOM under B.R. Act
Underscoring that while the ordinance has vested full control over the functioning of UCBs with the RBI,