Archive · 18 Jul 2025
RBI Official: Poor Governance, Not External Factors, Hurts Banks
The RBI's Deputy Governor, Mr. Swaminathan, explained that problems in Urban Cooperative Banks (UCBs) often stem from poor internal management.
He advised the bank directors to take a more active role in ensuring the banks are run honestly and carefully.
He pointed out that important roles like risk management and internal audit need to be independent and report directly to the board to identify and fix problems early.
The goal is to protect the bank and the people who have put money in it.
RBI Deputy Governor Swaminathan stated that weak internal governance is the primary cause of distress in Urban Cooperative Banks (UCBs).
He urged UCB directors to actively engage and ensure prudent and transparent bank operations.
Swaminathan highlighted the importance of strong internal assurance functions like risk management and internal audit.
He emphasized that all dealings, including related-party transactions, must be handled with utmost caution and full transparency.
The Deputy Governor stressed the need for independent boards prioritizing the long-term interests of institutions and depositors.
- Who
- RBI Deputy Governor Swaminathan and UCB directors.
- What
- RBI Deputy Governor Swaminathan addressed internal governance issues in UCBs.
- When
- July 11th (seminar date), article published July 18, 2025.
- Where
- Pune, India.
- Why
- To highlight the significance of strong internal governance in UCBs.
Current Governance Approach
Improved Governance Approach
Board Involvement
Current Governance Approach
Directors merely endorse senior management decisions.
Improved Governance Approach
Active engagement by directors, asking difficult questions, and ensuring prudent management.
- Organization
- Reserve Bank of India (RBI)
- Speaker
- RBI Deputy Governor Swaminathan
- Event
- Seminar for UCB directors
- Date of Seminar
- July 11th
- Primary Concern
- Weak internal governance