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Reserve Bank Governor Shaktikanta Das has said the central bank has noticed “excessive dominance” by one or two board members even in “big commercial banks” and asked the lenders to desist from such practices.
Board discussions have to be free, fair and democratic, Das said, addressing directors of Urban Cooperative Banks (UCBs) at a meeting organised by the Reserve Bank of India (RBI) , reported PTI .
“There should not be an over-dominance or excessive dominance by one or two members of the board, or the chairman or the vice-chairman. We have seen this even in big commercial banks… wherever we have seen this, we have told the bank that this is not the way,” he said.
Das further explained that the central bank is “not comfortable” with the gross non-performing assets ratio of 8.7 per cent in urban cooperative banks (UCBs) and asked them to work towards improving the same.
Addressing directors of UCBs in the financial capital at an RBI-organised conference, Das urged that such lenders should improve the governance standards, avoid related-party transactions and focus on credit risks, among others.
It can be noted that the UCB sector has been fraught with multiple challenges and also witnessed difficult times in the recent past, like the implosion of the city-headquartered Punjab and Maharashtra Bank.
