The RBI has removed Maharashtra Cooperation Minister Babasaheb Patil and seven other directors from the board of the Latur District Central Cooperative Bank (Latur DCC Bank). The directors were found to have crossed the 10-year limit for holding the position.
The RBI’s decision concerns eight directors of the cooperative bank including Patil. It was triggered after a complaint that the directors had continued in their positions despite having served longer than the required tenure.
The matter was also taken to the Aurangabad Bench of the Bombay High Court. Satish Sheshrao Jadhav, a bank member and former employee, had also raised the issue and asked for action against the directors on their continued tenure.
The court eventually directed the RBI to investigate the representation and take a decision according to the applicable rules.
The action is related to the tenure of directors in cooperative banks. There are restrictions on the tenure of directors of a cooperative bank after a period of 10 years in the Banking Regulation Act.
With the RBI order, Patil and the seven other directors will no longer be directors of the Latur DCC Bank. The decision is due to their position on the board of directors of the bank and not related to Patil’s role as the Cooperation Minister of Maharashtra.
Patil belongs to the Nationalist Congress Party and is a member of the Maharashtra government. In the wake of this RBI decision, he might challenge the order in the High Court.
The legal proceedings could determine whether the action is still in force or if any further directions are issued about his position on the bank board.
Central Cooperative Banks form a very important part of the cooperative banking system in India. They provide banking and credit-related services at the district level and are also key to the cooperative credit network.
The RBI’s decision to revoke the tenure of directors in cooperative banks has also brought attention to the rules governing the tenure. The case also shows the duty of complying with statutory limits while a board member of such institutions.
In the future, such directors will have to take legal recourse against the RBI’s decision. For now, the removal order will cover Babasaheb Patil and seven other directors of the Latur District Central Cooperative Bank for exceeding the prescribed 10-year tenure.
