Efforts on to restrict directors of cooperative banks to two terms

Experts from the cooperative banking sector stressed upon the need to encourage young people to participate in the management of banks to raise their performance

Satish Marathe, director, Reserve Bank of India (RBI), said that the government is trying to ensure smooth succession in management by restricting the role of members of the board of directors to two terms. “Most directors of cooperative banks are unaware of the changes in the banking sector and it is necessary to include on the board persons who understand banking and are familiar with banking regulations,” he said. Marathe also underlined the need for cooperative banking to follow the principle of separation of ownership and management.

Vishweshwar bank chairman Anil Gadhave speaking at the event ‘Banking Gappa (Let’s talk banking)’ hosted by Vishweshwar Sahakari Bank as part of its golden jubilee celebrations at Boat Club on Sunday. (HT PHOTO)

Marathe was speaking at the event ‘Banking Gappa (Let’s talk banking)’ hosted by city-based Vishweshwar Sahakari Bank as part of its golden jubilee celebrations at Boat Club on Sunday. The directors of 35 cooperative banks participated in the event. Vishweshwar bank chairman Anil Gadhave welcomed the guest speakers and elaborated on the theme of the discussion. Experts from the cooperative banking sector stressed upon the need to encourage young people to participate in the management of banks to raise their performance. If the same people stay on the board of directors of banks for years together, stagnation and inefficiency will creep into the bank’s working leading to a decline in their operational performance, they said.

Vidyadhar Anaskar, chairman, Maharashtra State Cooperative Council, moderated the discussion. He explained the central government’s stand that cooperative banks should rope in younger people in their management and decision-making process. Anaskar said that cooperative banking is undergoing a paradigm shift thanks to a stricter regulatory regime and mutual cooperation between strong and weak banks can help strengthen the sector as a whole. Strong banks can run small banks till the latter gain strength to operate on their own rather than taking them over, Anaskar suggested.

Subhash Mohite, chairman, Pune District Cooperative Banks’ Association, said that banks should introspect rather than blaming the regulatory system for all their problems. “We keep receiving operational data from member banks and often see warning signals about the state of affairs of some of them. We can offer help to such members to streamline their functioning and get them back on track,” Mohite said.

Milind Kale, chairman, Cosmos Cooperative Bank, said that the sector has been bedeviled by the directors’ attitude of not letting go of control. “We should do head hunting to identify accomplished people in their early 50s and encourage them to participate in management so that we get the benefit of their knowledge and experience,” Kale said.

Smita Yadav, chairperson, Jijamata Sahakari Bank, said that women directors can play a major role in improving the image of the cooperative banking sector. Women achievers in various fields should be encouraged to become bank directors, she said.

Smita Deshpande, chairperson, Bhagini Nivedita Sahakari Bank, said that common people have their own peculiar needs which small banks can understand and therefore, small banks are important. She said that the amalgamation of banks in the consolidation process should be based on banking parameters as well as the cultural connect between banks.