Shri Swaminathan J, RBI Deputy Governor, Highlights Governance, Technology, and Capacity Building for Urban Co-operative Banks

In a speech at the Conference of Governance in Urban Co-operative Banks for UCBs in Andhra Pradesh, Karnataka, Kerala, and Telangana, Shri Swaminathan J, Deputy Governor of the Reserve Bank of India (RBI), addressed critical aspects for the thriving of Urban Co-operative Banks (UCBs).

Key Points:

1. Significance of UCBs:

   - UCBs play a crucial role in the financial system, serving diverse segments of society.

   - Historical contributors to financial inclusion, UCBs have a unique outreach to common citizens, businesses, agriculture, and marginalized sections.

2. Governance and Professionalism:

   - Effective governance is foundational, emphasizing transparent decision-making, accountability, and adherence to best practices.

   - Directors should view themselves as trustees of depositors' savings, ensuring depositors' interests are paramount.

   - Directors urged to have a basic understanding of financial statements, underwriting standards, and compliance with statutory and regulatory requirements.

   - Vigilance systems, internal audit, and fraud detection mechanisms should be robust with zero tolerance for malfeasance.

3. Adoption and Upscaling of Technology:

   - UCBs encouraged to leverage technology strategically for improved efficiency, customer experiences, and streamlined operations.

   - Emphasis on cybersecurity measures to mitigate potential cyber threats in the digital landscape.

   - Directors urged to be receptive to adopting the latest technology from credible suppliers after proper due diligence.

4. Capacity Building:

   - Human resources are highlighted as the most valuable asset, and capacity building is crucial for UCBs.

   - Structured training programs, leadership development, cross-training, and recognition for learning efforts are recommended.

   - The role of the Umbrella Organisation (UO) for UCBs is acknowledged for its potential contributions to capacity building and technology upscaling.

5. Supervision of UCBs:

   - The RBI emphasizes a holistic and thematic approach to supervision, addressing complexities and systemic risks.

   - Structural improvements aim to enhance agility, flexibility, and specialisation.

   - Supervisory initiatives focus on identifying root causes of vulnerabilities, with an assurance of the RBI's commitment to safeguard depositors' interests.

6. Conclusion:

   - Shri Swaminathan J concludes by emphasizing that sound governance and professional management are crucial for UCBs to contribute to financial inclusion and well-being.

   - The efforts invested today in fortifying the UCB sector are seen as a safeguard against potential threats and risks, contributing to a robust and secure financial future.

The speech underscores the pivotal role of UCBs, addressing challenges through governance, technology adoption, and capacity building. Shri Swaminathan J emphasizes the RBI's commitment to the sector's well-being and the nation's financial stability.