Vijay Kurankar, CEO, Ambarnath Jai Hind Cooperative Bank, spoke on the topic of Governance at the FCBA 2024 conference at Lucknow. Edited excerpts:
There should be completely fit and proper people in the board of management. People from outside are needed, experts are needed. RBI is expecting professionalism in the boards of cooperative banks.
Does that mean professional qualified person will be able to run the bank very well?
In many boards now, there are directors whose qualification is just SSC, or not less, but they are very professional as far as their knowledge and experience goes. They are elected by general body, taking into account their past background, qualifications and other things. Also, 51% of directors should be having special knowledge, professional experience in the field of accountancy, economics, small scale industry and any other matter, any other subject which is useful to the bank. So, if the composition of the board is that kind of people, then your board is fit and proper.
Then important point is, whether it is useful to the bank. Even for, even before the board meeting or any other meeting, we are supposed to have an agenda. Along with the agenda, we submit the data for any agenda. We submit the data to the board for any committee. We submit a proposal 3 days in advance to all the members of the committee. So that before coming to the meeting, they go through the agenda, they go through the proposal and give their inputs. If there are gaps in the proposal, they highlight, even before coming to the meeting. So, we’ll come to know what are the gaps in the proposal. So accordingly, when we come to the meeting, our answers are ready. Management team will keep the answers ready.
Secondly, what transpired in the meeting – that is also important. There must be free and frank discussion about the subject matter. Apart from financial angle, we must check the background of the promoter – that is important. Some board members are aware about the promoter. They highlight that about the promoter.
The function of risk management committee is to identify the risk, assess the risk, measure the risk, monitor the risk, and try to find out mitigants.
We have suggested risk-based internal audit to branch-wise risks and whether they are high-level, medium, or low. What is the trend of the risks? They are increasing or decreasing. What are the mitigants you want to put in place? What are the mitigants you should put in place? Risk-based internal audit will give you, not only about the branch, but what are the top 5 risks for the bank. And what are the mitigants, what BOD can do to it? Certain things are mitigatable, certain things cannot.
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