Financial Daily from THE HINDU group of publications
Tuesday, May 14, 2002
Financial Daily from THE HINDU group of publications Tuesday, May 14, 2002 |
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Economic Offences Money & Banking - Co-operatives Industry & Economy - Economic Offences Urban co-op banks flouting norms on board constitution Rajalakshmi Menon
MUMBAI, May 13 MOST urban co-operative banks (UCBs) are not following the RBI directive of having at least two professionals on boards of banks, according to Reserve Bank of India officials. After the Madhavpura scam a year ago, the RBI had directed all UCBs to have a minimum of two professionals on their boards. One of these officials should be necessarily a chartered accountant while the other could be any professional such as an MBA, economist or ex-banker, the RBI had said in a notification to all UCBs. However, only a negligible number of UCBs have followed the RBI guidelines. According to UCB officials, having professionals on board would not necessarily ensure that the bank is well-run; but what is essential is to ensure there is no political influence in the management of these banks. Meanwhile, a clutch of multi-State urban co-operative banks were seeking more powers for their boards so that these banks would be in a position to clean up their balance sheets through speedy write-off, bank officials said. They said these banks would approach the Registrar of Co-operative Societies to appeal for easier norms to be able to write off their bad loans and to enable swifter recovery of debts. Said one bank official, "Unlike commercial banks, we cannot completely write off any bad account with just a board okay. We have to get the approvals of a special auditor, the annual general meeting and then the Registrar of Co-operative Societies." The entire process is long and painstaking and special powers to the board would help the bank clean up balance sheets. Urban co-operative banks are also not allowed to approach the Debt Recovery Tribunal for settlements of loans and have to approach the co-operative court for settlements of these debts. Officials said that if co-operative banks could access DRTs like commercial banks, they would be in a position to settle their bad accounts more quickly. Officials said that the banks were also seeking relaxations in the mode of compromise settlements. Officials said that the banks could not settle their bad loans across the table unlike co-operative banks and were restricted in their compromise settlements.
RBI's reading on gilts scam A TEAM of top RBI officials today met with the Finance Ministry officials in New Delhi to apprise them on the status of the Home Trade-co-operative banks gilts scam. RBI sources, said the team had made a presentation on the measures taken by the central bank after the gilt scam broke out. It has also apprised the Minister on details of the losses suffered by various cooperative banks.
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