CHAPTER 10

ANALYSIS AND INTERPRETATION

10.0 INTRODUCTION

This research attempts to study the contribution of corporate governance practices followed in
Indian banking sector by public ,private sector banks. Ability of these banks in terms of reality
level and of reporting quality , disclosures of financial information and transparency in working
shown by these banks through their annual reports.
The researcher has given more focus on existing level of governance in co-op banking sector,
disclosures and transparency in reporting through annual reports. For this purpose an
experimental study was conducted by researcher on the corporate governance standard
disclosures practices prevailing in the banking sector in India.
To assess the effectiveness and structure of processes for the corp. govn. the substance and
quality of reporting of governance practices and disclosures in the annual reports bank websites,
quarterly reports for the information of stakeholders ,investors ,depositors.
For this purpose an experimental study was undertaken by the researcher on the corporate
governance standard and disclosure practices prevailing in the banking sector of select Public,
Private, Foreign and Co-op banks.
The period of study is two year i.e.2011-12-13 only as it will exhibit the latest information,
developments of the corporate governance practiced in the banks. Another reason in respect of
listed banks SEBI has incorporated new clauses of disclosures as recommended by various
committees in its revised clause 49 of listing agreement w. e. f 29/10/2004.
Strengthening the corporate governance norms market regulator SEBI notified changes on
17/4/2014 in clause 49 of the listing agreement which refers to corporate governance
subsequent to notification of the companies act 2013.
In respect of co-op banks many banks had multifold their business by way of merger and
acquisitions by 2010-12-13. On this background annual reports of 2011-12-13 were considered
not suitable and proper for the research study. This has definitely provided the updated position
of governance practices and disclosure norms adopted by banks and their commitments to
publish in their annual reports.
In respect of co-op banks as there is no mandatory provision about disclosure of corporate
governance practices RBI under lined its need by way of communication on site inspection
reports, discussion with the Board, and Top management of the bank during and post inspection
meetings.
However RBI has made Basel committee norms and recommendations applicable to co-op banks
which has incorporated basic principles of corp. govn .disclosures and transparency in working
of banks.RBI intends voluntarily adoption of the governance practices by UCB Sector.
Study of following select banks was conducted.

PUBLIC SECTOR BANKS

State Bank of India
Indian bank
Bank of India
Canara bank
Bank of Baroda
Corporation bank
Syndicate bank
United bank of India.

PRIVATE SECTOR BANKS

ICICI bank
Axis bank,
H.D.F.C bank,
Citibank,
IDBI

CO-OPERATIVE SECTOR BANKS

[1]. Multi State banks
Saraswat co-op.bank
Cosmos co-op bank
Abhyudaya co-op bank
Bharat co-op bank[Mumbai],
ShamraoVitthal co-op bank [SVC]
North Canara Goud Saraswat Brahmin co-op bank [NKGSB]
Punjab and Maharashtra co-op bank [PMC]
New India co-op bank ,
A.P.Mahesh co-op bank
Kalupur Commercial co-op bank
.
[2] Scheduled Banks
Greater Bombay co-op bank [GBCB],
Mahanagar co-op bank
Mogaveera co-op bank,

[3] Non scheduled Banks-

Apna Sahakari bank
,Mangal,co-op bank
DMK Jawali Sahakari,bank
Bhatkal Urban co-op bank
Saidapet Urban co-op bank

For better comparison with public and private sector banks and keeping in view the different
status of urban co-op banks such as Multi state, Scheduled, Non scheduled and Primary UCBs
The business mix of these banks ranges from above Rs.100 CRs. to Rs.10000.CRs.
10.1. ANALYSIS OF SECONDARY RESEARCH

OBSERVATIONS-PUBLICSECTOR,PRIVATESECTORBANKS

On examining and perusal of annual reports websites of above named public sector banks, It is
observed that in terms of various clauses of SEBI listing agreement these banks have adopted
corporate governance philosophy and code of conduct, ethics for the members of the Board, Top
management.
These banks publish a separate chapter on governance practices followed and items of statutory
disclosures. They also publish structure of Board, Strength and Size of Board ,Detail profile of
Directors their age, date of joining in board, tenure, qualifications, experience, shareholding,
their directorship with other companies, holdings ,etc. besides role of chairman, CEO,CFO.
The annual report also publish the constitution of Sub committees ,Executive committees, which
are well defined in terms of code of best practices, Remunerations, No. of meetings held, no. of
meetings attended by directors, travelling allowances paid to directors, shareholding patterns is
also disclosed.
Items of statutory disclosures and its compliance status, customers services, complaints
investors grievances, redressal mechanism is also disclosed. Means and communication of
information for the information of stakeholders are provided.
Besides the chief executive officer [CEO] and chief financial officer [CFO] certification and
finally unqualified certificate from the auditors confirming banks had complied with conditions
of corporate governance and published the same in the annual report.

10.2 RESULTS

All the banks under study showed that corporate governance policy is strictly followed in respect
of disclosures. Every bank has framed a corporate governance philosophy and disclosers as per
various clauses of listing agreement with SEBI, RBI guidelines, A separate chapter is placed in
the annual report on the subject and overall performance of reporting was found good.
On examining and perusal of annual reports ,websites of above named private sector banks it is
observed that similar pattern of reporting like public sector is followed .Each of these banks have
formulated corporate philosophy and code of ethics and overall performance of reporting has
edge over public sector banks .In case of ICICI, Citibank due to globalize business operation and
its complex nature, governance and disclosure standard are better.
However at the same time failure of Global Trust Bank (GTB), financial irregularities in Bank of
Karad, United Western Bank Satara ,Ownership, stake and control issue by families in Bank of
Rajasthan, violation of regulatory norms on loans and advances in new generation banks like
Bank of Punjab and few others brings the darker side of governance practiced and role of the
RBI to monitor the functioning of the Management.
It is during and after 2002 RBI initiated the action on the suggestions of Advisory Group(2001)
and Ganguly Committee (2002) on corporate governance policy implementation in banking
sector. Many banks started incorporating separate chapter on the subject in their annual reports
disclosures with better accounting practices.

10.3 OBSERVATIONS-CO-OP BANKING SECTOR

On examination, and perusal of annual reports, websites of above named co-op banks the
performance was variedly different in respect of formatting, contents ,disclosures, transparency
presentation of annual reports. Key observations are broadly classified as under.

[1] BOARD OF DIRECTORS

[a] Out of 18 banks under study 9 banks have not disclosed the educational, professional
qualifications of the directors of the board.[ Researcher has considered the minimum
qualification as graduation of any stream.] Similarly

[b] As per the stipulation of RBI, UCBs are required to induct minimum two professional
directors [Accounts, finance and banking expert resp.] on the board of the bank. All the banks
under study would have complied with the said stipulation.
It is observed from the disclosed information that all the directors of 3 to 4 banks are
professionally qualified, expertise in the areas of banking ,finance, management, chartered
accountant, economics, medical, engineering, architect,
[c] In one of the banks besides Chairman, Vice Chairman. Sr. Vice Chairman, Executive
Director is appointed.

[d] All the banks have elected board of directors and composition of boards in terms of
provisions of state co-op scty. act and multi state co-op scty. act
.
[2] CHIEF EXECUTIVE OFFICER-

The banks under study have appointed qualified and experienced CEOs either purely on seniority
basis or meritorious and experienced officer from outside the bank. In 4 banks CEOs are termed
as Managing Director, In one bank Joint Managing director is appointed. In one bank General
Manager carry out the functions as CEO.As per the RBI stipulation UCBs are required to appoint
full fledged CEO.

[3] BOARD COMMITTEES

–
As a part of good governance it is required that the bank should form the relevant committees
with certain delegation of powers. The study found that as per RBI stipulation all banks have
constituted ALCO, Audit committees. 11 banks have disclosed the information about the sub
committees.
These banks have constituted other regular committees like loan, legal recovery, investment,
staff, IT audit etc. 5 banks have formed the risk management department and risk management
committees, besides vigilance, relationship management, complaint redressal committee of the
executives.
However in majority banks the committees are chaired by chairman of the bank.

[4] DETAILS OF MEETINGS

–
All the banks have adhered to the monthly board meeting [one meeting per month] However out
of 17 banks under study only 10 banks have disclosed the constitution ,names, details of no. of
board meeting, Sub committee meetings,1 bank stated total meetings as a whole.6 banks have
not disclosed any information.

[5] ATTENDENCE-

Only Five (5) banks have reported the attendance of members in detail I e, meeting wise, name
wise, Two (2) banks have stated average attendance where as other banks have not disclosed any
details.

[6] TENURE OF BOARD-

The tenure of elected board is generally for the period of five years unless and otherwise it is
superseded by the registrar under the provision of act and administrator is appointed on the bank
.All the banks under study had elected board of directors .In case One (1) bank it was informed
that state register could not hold the elections over decade and process is initiated now.
.
[7] CONSTITUTION OF BOARD-

Composition and strength of maximum and minimum no. the elected board of directors and co-
option in case of vacancy is as stipulated in the state act and bye laws of the bank. It is observed
that this is not strictly adhered by all most all the banks.

.[8] DECISIONS OF THE BOARD-

It is observed that in majority banks decisions are unanimous. The most commonly used mode
of decisions making by board is consensus.

[9] AGENDA OF MEETINGS

The study revealed that the members of the board receive the notice of meeting with agenda
papers, notes at least one week in advance but many of the times additional subjects are taken up
for meetings on the day, prior days or at the time of meeting depending upon the urgency of the
matter.
However this practice is followed in routine way in all the banks for which members are not well
prepared or studied the subject matter. Due to lack of, low level of delegation of powers to
management staff meetings are flooded with routine nature of matters for discussion and
decision

[10] DIRECTORS SITTING FEES,REMUNARATION-

As per the provisions of the act directors of the board are entitled for prescribed sitting fees,
conveyance allowances for attending meetings. It is expected that bank should disclose the
remuneration policy for the board and senior management.
None of the banks have disclosed the said policy or confirmation statement on adhering to the
statutory practices .Expenditure is shown under the head of ‘’Directors sitting fees and
allowances’’ Two (2) of the banks have clubbed it under the head ’’Staff salaries and
allowances.’

[11] LOANS TO DIRECTORS AND THEIR RELATIVES.-

As per RBI disclosure guidelines banks have to disclose the statement showing the particulars of
loans and advances to directors and their relatives, companies and firms in which directors are
interested .Except 2 banks all have adhered to this disclosure norm.

[12] APPROVAL OF ANNUAL GENERAL MEETINGS-

The banks are not following the practice of circulation of minutes of last general body meeting
through annual reports. Therefore decisions, discussion on the recommendations of the board,
resolutions adopted on the subject of meeting is not made known to the members. Approval is
obtained on reading the proceedings.

.
[13] TRAINING TO BOARD OF DIRECTORS AND SR. MANAGEMENT.

All the banks under study have deputed their directors, Sr. executives, for the various training
and development programs conducted by RBI ,Co-op training institutes on various areas of
banking such as policy matters for UCBs, role and responsibility of the board ,Do & Don’ts,
applicable to board, NPA management, Deposits, Loans & Advances, ALCO, Important
provisions of Co-op act, RBI act, B.R act, Investment, RBI guidelines on various matters critical
areas like Risk management ,financial analysis, ratios and other operational areas like
KYC,AML,CTR, STR.
However none of the banks have conducted the induction training programs for newly elected,
co-opted members of the board. to make them aware about their role and responsibilities.
similarly the effectiveness of the training on the performance of board, working results were
not assessed.
In case of One (1) of the multi state bank, the bank has incorporated the policy in the employees
agreement and agreed to promote selective senior employees from lower grade to higher grade
on completion of each phase of business mix under the Business Mission Goal focused by the
bank. This strikes the attempt of performance linked incentive collectively to the employees for
their career development in the organization.

[14].POSITION OF CHAIRMAN AND CEO

In all the banks under study position of Chairman and CEO are held by different persons.
However CEO or Managing Director is a Ex-officio member of the Board and forms the quorum
of the meeting.

[15] WELFARE SCHEMES FOR MEMBERS-

All most all the banks have created separate Members Welfare Fund. The financial assistance in
the nature of medical expenses, health check up, felicitation of children’s of members for their
achievement in education, sports, with cash awards are extended under the scheme as per rules.
Some banks have conducted get together of members on special occasion.
One multi (1) state bank has recently introduced the scheme of felicitating one of the shareholder
every year as an ideal shareholder of the bank. This is the modest attempt to acknowledge
symbolically the role of banks shareholder in the growth of the bank. and reflect banks
contribution to treat shareholder with dignity and respect both as a group and as a individual.

[16] CORPORATE SOCIAL RESPONSIBILITY—

Four (4) banks have disclosed corporate social programs which include support to charitable
institutions, charitable events, community benefitted programs like medical camps, health
checkup, blood donation camp, support to sr. citizens, assistance to physically impaired,
distributions of note books to students, contribution to school and college.

[17] CORPORATE GOVERANCE

The reports of Nine (9) banks does not have the single line on the corp. govn. practices followed
by banks even the no. of board sub committee meetings held, members of such committees and
their attendance separately not disclosed.
Five (5) banks have made a statement about the governance but with a very limited extent of
covering no. of board and sub committee meetings held, attendance of directors.
Two (2) banks have stated average attendance.
One (1) bank follows the practice of obtaining compliance certificate on quarterly basis from
HODs.[ for compliance of regulatory rules and regulations.]
Two (2) banks besides details of meetings also disclosed constitution, scope and functions of sub
committee.
One (1) urban bank propose the formation of code of conduct for members of the board, office
bearers and employees of the bank in 2012-13 which I find is the most welcome move in co-op
banking sector.
In case of One (1) multi state bank annual report was found comparatively transparent to report
the working affairs of the bank and attempt was made to take into confidence on some of the
constraint issues faced by the bank such as in augmenting their share capital, stoppage of lending
because of paucity of capital, slow pace of branch expansion programme during the F.Y.2011-12
due to regulatory action by RBI. on account of certain observations made in some of the areas of
the bank during the course of inspection of the bank.
This attempts the approach towards the voluntary disclosure and co-operative governance.

[18] AUDIT REPORTS

Out of Seventeen (17) banks under study statutory auditors observations are as under.

Four (4) banks have made specific qualifying remarks related to the financial, profitability
particularly on the provisioning of assets by the bank.
One (1) bank has not published the auditors certificate.
In case of others it is observed that these banks have generally followed the accounting standard
principles as issued by I.C.A.I. and various disclosures as per RBI guidelines.
On examining and perusal of annual reports and websites of above named co-operative banks the
performance was variedly different.
The annual reports of, Abhyudaya ,New India, Kalupur commercial bank Mahanagar, Saidapet,
Bhatkal Urban banks does not have even single line on the corp. govn. practices followed by
banks even the no. of board ,sub committees meetings held, members of such committees and
their attendance separately is not disclosed..
The reports of NKGSB,GBCB,AP Mahesh, Bharat co-op banks make a statement about the
governance but with very limited extent of covering no. of board, subcommittee meetings held,
attendance of directors .
GBCB follows the practice of obtaining compliance certificate on quarterly basis from
HODs.[for compliance of regulatory rules and regulations.]
In case of small banks like Mangal, co-op bank discloses only a line of no .of board meeting
held. but statutory auditors has qualifying remark as average attendance .of members.
In case of Bhatkal Urban bank report does not contain the statement on corp. govn even
directors meeting attendance. However the bank propose the formation of code of conduct for
members of the board, office bearers, and employees of the bank in 2012-13 which is most
welcome move which I find in urban sector.
However these banks have generally adhered to the accounting standard principles as issued by
I.C.A.I. and various disclosures as per R.B.I. guidelines but with qualifying remarks by statutory
auditors particularly on provisioning of assets and profitability of bank.

10.4 RESULTS/ KEY FINDINGS.-SECONDARY RESEARCH

All the banks under study showed that corporate governance philosophy, policy is not framed
and governance practices are not followed. Code of conduct for board of directors, senior
management is not framed and even if so not disclosed in annual reports irrespective of size,
volume of business of banks .Banks web sites are not updated at regular intervals. Means of
commutation to members is not developed.
Annual report is the only main source of information to know the working performances of bank
.It is sent on the eve of Annual general body meeting of the bank after finalization of accounts
and certification by statutory auditor. This involves a period of over one and half year.
Annual reports are typically framed in statement form and lacks the transparent working. The
text of the annual reports are typically framed, contents of reports are more of a routine nature
without any depth of factual fair transparent reporting about the affairs ,performance of the bank.
where as various accounting disclosures as specified by RBI are generally followed due to
mandatory provision and to avoid preemptive actions.
Even the banks with multistate operations and existence across the country in the states of
Maharashtra, Gujarat, Karnataka, Goa, Delhi, Andhra Pradesh with network of over 100 brs. and
over lacs of members, and depositors with strong deposit hold ,business mix with big
organization set up also do not follow the governance practices.
Actually it is expected that these banks should have documented corporate governance policy
and code of ethics for board of directors as they are not only responsible and accountable to
restricted region, or group of stakeholders, investors, depositors of one state but interest of multi
state stakeholders across the country is involved. Means of communications to reach the
members is very limited, restricted. The text of Annual reports contents should have transparent
working report for the information of stakeholders and retain their confidence.
To conclude the level of governance and disclosure in co-op banking sector is below average as
compared with public.pvt sector banks. One of the reason attributed is non statutory obligation,
even banks are not intending voluntary approach towards this directions due to ownership pattern
based on caste, community, creed which influence the effective governance and functioning of
banks and harmful for banks election.
Annual Report is by rightfully very important annual document for the stake holders, members
of the banks. It is a working report addressed by the chairman on behalf of board of directors to
its members. It should be transparent, fair in reporting the affairs, performance of the bank while
reading members should gain confidence about the integrity of the management, board of
directors as they are trustees to their capital, deposits.
Oliver Boned has rightly put it as ‘’Annual Reports are best tools for detailing and promoting
corporate governance with its strong specific features. Corporate governance needs to be
explained ,developed and promoted.”
Pushkar Gupta stated that ‘’corporate governance is only royal road to the portal of corporate
success and there is no shortcut to achieve the same
.
10.5 PRIMARY RESEARCH- VISITS

The researcher visited following various representative groups of urban co-op banks, co-op
training institutes to collect the required information, data and interactions with office bearers on
the research study
.
[1]. Karnataka State Co-op Urban banks federation [KSCUBF]-Bangalore.

[2].Tamilnadu Federation of Urban co-op banks [TNFUCB]- Chennai.

[3]. National Federation of State co-operative banks ltd. [NAFSCOB]- Mumbai.

[4].Chennai Dist. Central co-op bank ltd. Chennai.

[5].Saidapet co-op bank ltd. Chennai.

[6].Reserve bank training college .Chennai.

[7].Indian bank Corporate office Chennai
,
[8] Vaikunthal Mehta National Institute of co-op Management. Pune.

[9]. Vittalrao Vikhe Patil Institute of co-op Management .Pune.

[10].YASHADA. Pune.

[11] CAB Reserve Bank of India, Pune.

10.6 ANALYSIS OF PRIMARY RESEARCH

The primary research was carried out by way of an interaction with office bearers of the above
and such representative groups of the sector, sr. bankers on the questionnaire in order to have
their valuable opinion on attribute of corporate governance, how much importance they attach to
corporate governance. The out come of this research is in support of the findings from the
analysis and results of secondary research..
Primary research was basically carried out to draw out qualitative opinion from the
representative groups, office bearers, senior bankers regarding the distinctive features and quality
of corporate governance and how it impacts on research objectives.

Interactions Results Analysis

On study of literature review and secondary research analysis interaction with office bearers of
various state, national level federations, association sr. bankers from public and co-op banks was
made on the structured questionnaire.
Researcher being in this sector over last 34 years attended various RBI Inspections over last 15
years in the capacity as Sr. Executive of various scheduled co-op banks. Hence observations of
RBI inspectors during inspection, and comments in inspection reports, discussions with RBI
authorities on various issues of banks, where in functioning of board, and management of bank,
governance and professionalism in co-op banking sector are found to be major areas of concerns.
Their views are also taken into account while analyzing results.

[1] Whether corp. govn. practices exit in co-op banking sector if so at what level.
.
One of the office bearer stated that the concept of corp.govn.is recently developed for Indian
banking sector, and beginning is yet to take place in co-operatives as sector still believes in
traditional way of banking. And shy of voluntary approach in this direction and on the contrary
there is a fear of exposure about the functioning of board members and affairs of the bank there
fore attempt is not made to attain minimal level of governance.

[2] Whether disclosures and contents in the Annual report of co-op bank gives a true and fair
picture of the working of the bank to its stake holders, depositors.

It is generally opined .that banks are generally adhering to the disclosures as per RBI guidelines
but accounting standard and principles are still not properly practiced and audit reports contain
various qualifying remarks about the financials of the bank.
Approach is to please shareholders by higher dividend payout even at the cost of profitability.
The contents of reports are more of a routine nature without any depth of factual reporting of the
affairs of the bank. Chronic and root cause of, serious irregularities, frauds and misappropriation
by insiders, outsiders critical comments of auditor, regulators, about managing the affairs of the
banks ect. does not form the part of chairman statements to members and report.
One of the director of national level federation stated that cooperatives lack in presentation skill
in reporting to members good deeds are not presented properly.

[3] Is the professional management exist in co-op banking sector/are they run
professionally.[reference to administration, delegation of powers, and responsibility and
accountability of board of directors and managerial team] if so at what level.
.
Majority have opined .that there is a lack of professionalism in the sector. Powers are
concentrated either with board, or with the chairman who influences the decisions process.
Delegation of powers are weak for the management staff and if so administrative powers are
exercised with the concurrence of chairman and board.
One of the executive of multi state bank stated that they follow well defined policy of delegation
of powers at various level of management. Policy has incorporated powers of chairman, board
committees, executive committees its scope, ratifying authority..

[4] Is duality of control responsible for lack of good govn, and professional management
practices in co-op banks.

OR

[5] Collapse of large scale co-op banks is attributed to failure of governance and professionalism
in management.

Majority including co-op bankers strongly opined that there should be exclusively separate
regulator for co-op banks. and separate legislative laws for cooperatives. At present different
state acts, central act, bye laws are governing the administration, management of co-operatives
by State registrar and banking operation, supervision by RBI.
This dual control mechanism is one of the main hurdle for growth of the sector. State co-op dept
is controlled with political influence and similarly co-op banks are dominated by politicians.
There is political nexus between them. Where as RBI is independent authority not responsible
and accountable for acts of registrars.
A lot of ambiguity in the working of these two regulators which has attributed to the failure
governance, recruitment of professionals.

[6] Regulatory measures for the improvements in both for strengthening the sector.
.
Experts welcomed the various measures initiated by RBI by executing memorandum of
understanding [MOU] with state govts, registrars ,Vision Document policy, appointment of
professional directors, banking experts on the board of UCBs, criteria for selection of CEO.
[7] Whether Public sector banks follow the corp. govn. practices as per governance philosophy
adopted by bank .and if so at what level.

[8] Whether board of directors and senior management follow the code of ethics adopted by
banks if so at what level.

[9] Whether annual reports contents, and disclosures give a true and fair picture of working of
the banks to their shareholders, depositors.

Sr. official from one of the Public sector bank pointed out that all public sector banks have
formulated corporate governance philosophy and follow the practices as it is mandatory
provision of SEBI listing agreement. Further he quoted how the Indian Bank made turn around
story from the colossal of bank from1993-94.
The bank adopted good governance practices ,restructuring of organization set up, ethical
business policy, formation of various subcommittees of the board, General Managers
committees, formation of various policies.
Greater transparency was brought into day to day administration with decentralization of powers
.Fair practices codes were imparted among the senior officers of the bank.
The bank is now one of the top performer public sector bank. About the content and disclosures
of annual report official stated that majority disclosures are of mandatory nature as prescribed by
SEBI, RBI ICAI. The auditor has to certify the compliance of corp. govn. and, code of ethics by
management besides CEO and CFO certification and publish the same in annual report of the
bank.
Ultimately stake holders and depositors are the best judge to comment on the working of the
bank as read and understood by them the report of the bank
.
10.7 RESULTS/ KEYFINDINGS PRIMARY RESEARCH

It is generally opined that corporate governance is very new concept for co-operatives and not
much discussed, debated. One of the reason is that though co-operative organizations, banks
works on democratic principles it is still controlled by one, or few individuals, affiliated to
political group, leaders.
Decisions are centralized & influenced by above groups and rather related to strengthen their
position than related to improve the performance of banks. This is one of the hurdles for
professional management in co-op banking sector.
Transparent working practices, transparent reporting system is not followed due to conflict
groups of interest at board level, and stakeholders of bank. In the eyes of general public,
depositors co-op banks are known by such political groups and there is no effective participation
by stake holders in the working of the bank.
Ensuring transparency in financial statements, integrity of board of directors and protecting the
interest of depositors, stake holders are the key attributes of good governance. which is lagging
behind.
Corporate governance as reported by few banks in their annual reports is very limited to the
statement of meetings at minimal level and not in true spirit of corporate philosophy followed in
bank as it is not mandatory provision of act.
Majority opined that duality of control of Registrar and RBI on co-op banks should be dispensed
with and there should be separate regulator, separate legislative laws for effective controlling of
co-op banking sector as interference by co-op depts. of state govts, registrar’s office are also
responsible for colossal of the banks.
While studying the interactions analysis of primary research it is found that due importance is
not attached to the corporate governance principles, practices in the co-op banking sector.
While studying the observations of RBI inspection reports and their comments it is observed that
in many co-op banks all the policy decisions are concentrated in the hands of chairman who is
also the chairman of sub committee of the board. Delegation to the bank’s chief executive officer
and managers are merely formality There is no proper study on the policy matters before
arriving at decision.
There is a need to clearly define the role and responsibility of professional directors either
elected or co-opted having the expertise of banking , finance as it is observed that there is not
much remarkable improvement in the working even after their induction in board of directors.
These appointment are made just to comply with RBI mandatory requirement.
Secrecy and confidentiality of the bank matters, agenda papers, board notes, deliberations,
discussions in the meeting are not maintained. It is a common experience that it is widely
discussed out side office and documents made public. which is most harmful and against the
principles of corporate governance and professional management.
Statutory auditors appointed by registrar for conducting the audit are not looking into the areas of
working of board, committees, recording of proceedings ,complaints against the of the
management ,directors ,administration, employees of the bank which are responsible for quality
working of the bank.
It is also opined that contents of annual reports are repetitive draft of earlier annual reports .with
slight changes here and there without reasoning on the financial performance of the bank,
business, profitability, NPA etc.