Efforts to limit directors of cooperative banks to two terms
Satish Marathe, director of the Reserve Bank of India (RBI), said the government was trying to ensure smooth leadership succession by limiting the role of board members to two terms. “Most directors of cooperative banks are unaware of the changes in the banking industry and there is a need to include people on the board who understand banking and know banking regulations,” he said. . Marathe also stressed the need for cooperative banks to follow the principle of separation of ownership and management.
Marathe was speaking at the ‘Banking Gappa’ event organized by the city-based Vishweshwar Sahakari Bank as part of its Golden Jubilee celebrations at the Boat Club on Sunday. Leaders of 35 cooperative banks participated in the event. Vishweshwar Bank Chairman Anil Gadhave welcomed the guest speakers and expanded on the topic of discussion. Experts from the cooperative banking sector stressed the need to encourage young people to participate in the management of banks to improve their performance. If the same people stay on banks’ board for years together, stagnation and inefficiency will creep into the bank’s operation, leading to a decline in its operational performance, they said.
Vidyadhar Anaskar, Chairman of the Maharashtra State Cooperative Council, moderated the discussion. He explained the position of the central government that cooperative banks should integrate young people in their management and decision-making process. Anaskar said cooperative banking is undergoing a paradigm shift through a stricter regulatory regime, and mutual cooperation between strong and weak banks can help strengthen the industry as a whole. Strong banks can manage small banks until the latter gain strength to run on their own rather than take them over, Anaskar suggested.
Subhash Mohite, chairman of the Pune District Association of Cooperative Banks, said banks should do some introspection rather than blaming the regulatory system for all their problems. “We continue to receive operational data from member banks and often see warning signs about where some of them are. We can offer help to these members to streamline their operations and get them back on track. Mohite said.
Milind Kale, chairman of Cosmos Cooperative Bank, said the industry has been plagued by the attitude of directors not to let go of control. “We should do a headhunting to identify accomplished people in their early 50s and encourage them to participate in management so that we benefit from their knowledge and experience,” Kale said.
Smita Yadav, president of Jijamata Sahakari Bank, said women directors can play a major role in improving the image of cooperative banking. Successful women in various fields should be encouraged to become bank managers, she said.
Smita Deshpande, President of Bhagini Nivedita Sahakari Bank, said ordinary people have their own special needs that small banks can understand and therefore small banks matter. She said the merger of banks in the consolidation process should be based on banking parameters as well as the cultural connection between banks.