Representative Image | Photo: Mathrubhumi
Thiruvananthapuram: In a move to resurrect the urban cooperative banks in Kerala, the Reserve Bank of India (RBI) annulled certain provisions in the Kerala Cooperative Societies Act-1969. RBI directed the urban cooperative banks to appoint a managing director. The managing director is not just an official head but a member of the administrative panel too. The members of the administrative panel, including the chairman, are not supposed to interfere in the day-to-day operations of the bank.
The Kerala Cooperative Societies Act provides certain powers to the secretary and president of administrative panel. The new direction by the RBO completely quashes this. With this, the administrative panel members cannot interfere in even loan applications as well.
Earlier, RBI had directed Kerala Bank and urban cooperative banks, which are having over Rs 100 cr deposit limit, to appoint CEOs with prior approval from RBI. It was also directed to appoint a board of management to link the CEO and administrative panel. However, this new direction to appoint managing director instead of CEO is applicable to all cooperative urban banks irrespective of deposit limits.
As per the Kerala cooperative rules, only a member of the cooperative society can be a part of the administrative panel. The new direction gives managing director direct membership in panel. The maximum tenure of a managing director is two years and it can be renewed twice. People representatives, including local bodies, cannot be a member of the panel with the new direction.
There are around 60 urban banks in Kerala and the new direction is applicable to all of them and the Kerala Bank.