Governance and Performance of Scheduled Urban Cooperative Banks in India

International Journal of Co-Operative Accounting and Management, 2021, Volume 4, Issue1, DOI: 10.36830/IJCAM.20213. https://www.smu.ca/academics/sobey/ijcam.html

22 Pages Posted: 3 Jun 2021 Last revised: 4 Jun 2021

See all articles by Dr Ashish Srivastava

Dr Ashish Srivastava

Reserve Bank of India; CAB, RBI, Pune

Ajit Kumar

Reserve Bank of India, Mumbai

Date Written: August 31, 2020

Abstract

This paper examined the relationship of governance and financial parameters for scheduled urban cooperative banks in India. Governance related parameters such as participation in annual general meetings, low or nil presence of family members in boards, training of staff, etc. were found to have significant, though not strong, positive correlations with Net Interest Margins, Return on Assets, and Return on Equity (ROE). The democratic structure of cooperative banks, beyond a threshold, and the quality of their professional management contributed to the quality of the overall governance at an increasing rate. Aspects such as educational qualifications of CEOs, qualifications and training of directors, training of staff, etc., were assessed as significant differentiators of the quality of governance. Improved quality of professional management contributed to about 32 basis points rise in the Net Interest Income, and the banks with very high governance scores enjoyed a higher ROE by 366 basis points.

Keywords: Cooperative Banks, Governance, Democratic Structure, Professional Management, Control Systems, Financial Performance

JEL Classification: G21, G30

Suggested Citation

Srivastava, Ashish and Kumar, Ajit, Governance and Performance of Scheduled Urban Cooperative Banks in India (August 31, 2020). International Journal of Co-Operative Accounting and Management, 2021, Volume 4, Issue1, DOI: 10.36830/IJCAM.20213. https://www.smu.ca/academics/sobey/ijcam.html, Available at SSRN: https://ssrn.com/abstract=3857695

Ashish Srivastava (Contact Author)

Reserve Bank of India ( email )

University Road
Pune 411016, Maharashtra
India

CAB, RBI, Pune ( email )

University Road, Pune
Maharashtra
India

Ajit Kumar

Reserve Bank of India, Mumbai ( email )

Central Office, Bandra Kurla Complex
Mumbai, Maharashtra
India

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