PROFESSIONALISATION OF MANAGEMENT IN URBAN COOPERATIVE BANKS
The urban cooperative banks (UCBs) constitute an important segment of the Indian banking system. They have an important role to play in mobilization of small savings and purveying of credit to the weaker sections of the society. In the context of liberalization of the Indian financial sector, they have to meet new challenges and competition from other banks including those in the private sector as well as other constituents of the financial system. It is, therefore, imperative for the primary cooperative banks to strengthen their financial structure, operational efficiency and profitability. They will also have to provide a qualitatively better customer service to cope with the challenges. All this requires skilled, dedicated and professionalised managements in the urban banks.
2. What is professionalised management?
The professionalised management implies divorcing of the ownership from the operational management of affairs of the bank. Thus, while the ownership rests with the shareholders, the executive management of the day-to-day affairs of the bank rests with the professional managers. The decisions are taken on the basis of corporate goals and objectives by application of expertise and scientific knowledge. The Board of Directors, as trustees of the members will, however, continue to retain the control functions such as setting of corporate objectives, formulation of broad policies, monitoring of performances, etc.
3. The pre-requisites of an effective management
The general body, the Board of Directors and the Executive constitute three wings of the management of an urban bank. It is essential for an effective management of the bank that the roles to be played by each of the three wings are kept distinct. The expected role of these three wings may be summarized as follows:
4. Professionalisation of Management in UCBs,and recruitment and training of personnel
Professional management in UCBs implies adoption of a strategy for strengthening the democratic framework for decision making process. This calls for:
Professionalism in the UCBs would require adherence by the Directors to the various Dos and Don’ts prescribed by the regulator which broadly includes the following:
A. The Directors of the UCBs should practice the following while overseeing the functioning of the bank:
B. However, in order to create a more professional environment the Directors should not indulge in interfering in the day-to-day functioning of the bank and involve themselves in the routine or every day business / management functions of the bank. They should not interfere / sponsor any business decision including sanction of loan proposal or involve themselves into matters relating to personal administration. Further they should maintain the confidentiality of the bank and should reveal details of bank’s agenda papers or of any constituent of the bank to entities not authorized to posses the information.
To sum up an UCBs would require the following aspects in its organizational set up - right from the BoD to the personnel working at the base level – to upscale its professional culture:
a) Management skills – The chief executive officers and other managerial staff should have a thorough knowledge of the various functional aspects within the prescribed regulatory and supervisory prescriptions.
Prepared by Shri C S Murthy - Revised by Shri , J K Pandey, Member of Faculty, CAB
Professionalisation of Management , By: J.K.Pandey