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The Reserve bank of India (RBI) on Friday laid down a set of rules for appointing managing directors and whole time directors in Urban cooperative banks. It has limited the tenure for an appointed person to 15 years. On the first appointment, the term of a director will be a for a period between three and five years. The guidelines came under its ‘fit and proper’ criteria.
The re-appointment for an individual can occur once the break of three years cooling period is fulfilled. The minimum age for a person to be appointed must not be less than 35 year and not more than 70 years.
To be eligible for the mentioned position, the person must posses a combined experience of at least eight years at the middle or senior management level in the banking sectors. The RBI’s guidelines further stated the MD must be a graduate and have an additional qualifications like diploma in Banking, chartered cost account, or post graduation in any discipline.
According to TOI’s report, the RBI have enquired all the cooperative banks where the CEO have been appointed without its approval to evaluate the fit and proper status of the existing MD in accordance to the present directions.
As per reports, the rules follows in the wake of collapse of several urban cooperative banks namely Punjab and Maharashtra Cooperative (PMC) where the CEO conspired with few members to divert funds to real estate developers.