Bengal cooperative banks come under RBI scanner
The authorities of several urban cooperative banks (UCBs) in West Bengal have come under the scanner for rampant violation of norms while making donations to charitable trust or benevolent organisations.kolkata Updated: Sep 02, 2013 12:23 IST
The authorities of several urban cooperative banks (UCBs) in West Bengal have come under the scanner for rampant violation of norms while making donations to charitable trust or benevolent organisations.
Charges against such banks are mainly two.
First is that such UCB authorities are frequently making contributions, which are in the nature of donations to the trusts for charitable or benevolent objections or for any exhibition in which the independent directors or their relatives are interested.
The second charge is that often while making such donations, the banks exceed the ceiling of 1% of the published profits of the bank for the previous year.
According to sources in the RBI, since most independent directors are political appointees, they often resort to undue influence on the bank authorities to release donations to organisations or exhibitions, where either they or their close relatives are involved.
The RBI has already cautioned such banks and asked them to refrain from releasing donations to any charitable organisation or exhibition where either the directors of the banks or their relatives are involved, even within the permissible ceiling of 1% of the published profits of the bank concerned for the previous financial year.
“We will continue to monitor the donation activities of the banks in future as well. If they follow the laid down norms on donations, be it terms of remaining within the ceiling or avoiding donations to organisations where the directors or their relatives are involved, we will retrain from taking any actions. However, if they continue to violate the norms, we will take strong penal measures against the officials and directors concerned,” he said.
In case of defaulting directors, RBI can go to the extent of terminating their directorship. In case of defaulting employees, they would be first suspended and then even terminated depending on the nature of norms violation.
Explaining the term “relative”, an RBI official said that the list of relatives include spouse, father, mother including step-mother, son including step-son, daughter-inlaw, daughter including stepdaughter, son-in-law, brother including step-brother, sisterin-law, sister including stepsister and brother-in-law,
The term interest means trust in which directors / relatives of directors hold positions as Trustees, or are beneficiaries or involved in any capacity in the working of the trust, which is likely to influence the independence of the director.