| (i) |
Particulars of its organisation, functions and duties |
Organisation : Department of Supervision NABARD, Head Office, Mumbai Tel : 022 – 26541834; Fax : 022-26530103 e-mail:dos@nabard.org
Functions and duties :
Section 35(6) of the Banking Regulation Act, 1949, empowers NABARD to conduct inspection of State Cooperative Banks (StCBs), Central Cooperative Banks (CCBs) and Regional Rural Banks (RRBs). In addition, NABARD has also been conducting periodic inspections of State level cooperative institutions such as State Cooperative Agriculture and Rural Development Banks (SCARDBs), Apex Weavers Societies,Marketing Federations etc., on a voluntary basis.
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| (ii) |
The powers and duties of its officers and employees |
NABARD is entrusted with the responsibility for conduct of statutory inspections of State Cooperative Banks, District Central Cooperative Banks and Regional Rural Banks under the Banking Regulation Act, 1949/(AACS). The regulatory powers continue to be vested with the Reserve Bank of India. The Department of Supervision functions under the overall supervision and guidance of Chairman, Deputy Managing Director and CGM.
The Department has 5 Zones viz., East, West, South, North-I and North-II for attending to the Inspection and Supervision related works emanating from various States falling under the jurisdiction of each Zone. Zones are under the control of General Managers assisted by Deputy General Managers, Assistant General Managers, Managers, Assistant Managers and other supporting staff.
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| (iii) |
Procedure followed in the decision making process, including channels of supervision and accountability |
There is a total decentralisation of powers with regard to the functioning of Head Office (HO) and Regional Offices (ROs). The statutory inspection reports are issued by the respective Regional Offices of NABARD with a copy to Department of Regulation (DOR) of RBI. Copies of all the inspection reports issued by the Regional Offices are received in the Head Office of NABARD and they are subjected to qualitative scrutiny by the officers in Grades 'B' and 'C" in accordance with the Inspection Guidelines/Manual issued by NABARD and put up to the General Manager through the respective Deputy General Managers of concerned Zones. Thereafter, Head Office Recommendation (HoR) with regard to the grant/continuance of licence or otherwise to the supervised entities are sent to the RBI. In case of any difference of opinion on interpretation of guidelines issued, such matters are put up to the Chief General Manager (CGM) for appropriate decisions. Similarly, inspections reports of the supervised entities conducted by the officers of NABARD, Head Office are reviewed by AGMs/DGMs and put up to GM for editing and finalisation. Thereafter, with the approval of CGM, the Recommendatory Notes on these inspections are forwarded to RBI for further necessary action.
Feedback on the developments in conduct of inspections, etc., is obtained from the ROs through periodical returns and also a Monthly DO letter.
The Chief General Manager reviews the State-wise working of the respective Zones in a monthly review meeting regularly.
Before recommending any case to RBI for initiating regulatory action against the recalcitrant banks, such cases are put up to Top Management depending on the gravity of the seriousness of such cases.
The Board of Directors of NABARD and Board of Supervision review the working of the Department periodically and provide necessary policy guidelines with regard to the supervisory role of NABARD from time to time.
With a view to tuning up the supervised entities to the international standards of prudential norms, "Trigger Points" are prescribed by NABARD,HO, which have bearing on the co-operative banks and regional rural banks based on the following parameters:
- Level of Non-Performing Assets.
- Capital to Risk-weighted Assets Ratio (CRAR).
- Erosion in the value of assets/Non-compliance with minimum capital requirements.
- Profitability.
- Liquidity
- Management & Governance
- Systems (Internal Checks and Control)
- Compliance to various Acts/ Rules/RBI Directions / NABARD Supervisory Instructions/Inspection Reports / Audit / MOU Obligations
The above parameters are all measurable, monitorable and action is taken in a calibrated manner if the bank reaches the trigger point under any of the above mentioned parameters.
DoS has digitalised the entire supervisory process through an application called “SuperSoft” launched on 12 July 2022. All inspections are conducted through SuperSoft and the system is designed to issue the inspection report in digitised form to the SE in addition to the manual issue of report to them. SuperSoft will enable submission of compliance item wise and also scrutiny thereof at our end for satisfactory closure /seeking further compliance besides providing scope for carry-over of the observations to the next inspection cycle, thereby providing continuity in the assessment. The digitalisation process has smoothened the supervisory process.
NABARD has been following a system of rating the banks during the course of on-site inspection on the basis of the Capital Adequacy, Asset Quality, Management, Earnings, Liquidity, Systems and Compliance (CAMELSC) approach. 'Enhanced CAMELSC’ based Supervisory Rating model has been developed as an interim mechanism before migrating to Risk Based Supervision (RBS) as recommended by a Working Group on Risk Based Supervision (WG-RBS) constituted by NABARD in 2019.
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| (iv) |
Norms set by it for the discharge of its functions |
NABARD, Head Office calls for inspection budget from its Regional Offices every year and after scrutiny, approves the inspection budget before March every year. The guidelines for periodicity of inspections are as under :
- All StCBs, RRBs and SCARDBs are to be inspected annually.
- DCCBs having C & D rating and having business volume of more than Rs. 3000 crore are to be inspected annually.
- DCCBs which are not covered under item (ii) and with rating marks above 50, are to be inspected biennially.
- CCBs/ StCBs found to be recomplying with Section 11 (1) of the Banking Regulation Act, 1949 (AACS), as per the last inspection report will also be inspected in the ensuing year.
- As an interim approach before migrating to risk based supervision, all RRBs, all Scheduled StCBs(24) and the DCCBs and non-scheduled StCBs based on certain objective criteria will be subjected to Enhanced CAMELSC based supervisory approach every year
- NABARD, Head Office, will also take up the inspection of a few StCBs/CCBs /RRBs on a selective basis.
For efficient discharge of their functions, the officers in the NABARD in HO/ROs form teams for conduct of inspection of banks.
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| (v) |
Rules, regulations, instructions, manuals and records, held by it or under its control or used by its employees for discharging its functions |
Banks supervised by NABARD have to comply with various Regulations/Acts which are intended to ensure effective and smooth operations of different banks which are to carry on their activities as per norms prescribed in these Regulations/Acts and also as per the norms prescribed by Regulatory Authorities as under :
| Sr. No. |
Name of the Regulation/Act |
Final Regulatory Authority |
| 1 |
The Banking Regulation Act, 1949. |
Reserve Bank of India |
| 2 |
The Reserve Bank of India Act, 1934 |
Reserve Bank of India |
| 3 |
The Cooperative Societies Act laid down by the respective State Govt. |
The Registrar of Cooperative Societies of the State. |
| 4 |
Bye-laws of the cooperative banks |
The Registrar of Cooperative Societies of the State. |
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| (vi) |
A statement of the categories of documents that are held by it or under its control |
The NABARD does not hold/maintain any legal document having contractual obligation. However, since inspection of banks is carried out under Section 35(6) of Banking Regulation Act, 1949, following statutory documents are kept in NABARD:
Inspection Report (IR) - This document contains findings on various aspects of the functioning/ performance of the bank recorded by the Inspecting Officer (IO) during the course of the inspection.
Recommendatory Note (RN) - This document contains a summary of findings of the inspection and compliance by the bank with the various statutory provisions particularly those relating to minimum capital requirement, maintenance of statutory cash reserve/liquidity ratios and whether the methods of operation of the bank are detrimental to the interests of the depositors etc. Depending upon the level of compliance/non-compliance, recommendation is made by the IO for issue of licence u/s 22 of the BR Act, 1949 or keeping the license application in abeyance or rejecting the license application of the bank by RBI.
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| (vii) |
Particulars of any arrange-ment that exists for consultation with or representation by the members of the public in relation to the formulation of its policy or implementation thereof |
- 1. Primary function of the Department is inspection of State Cooperative Banks, District Central Cooperative Banks, Regional Rural Banks, SCARDBs with reference to their financial position as on i.e. 31 March. As such, our dealings are not directly with the members of Public.
- 2. In case any member of Public has any specific complaint / grievances against the banks being inspected by us, he / she can file his/her complaint with NABARD. Such complaints / grievances are looked into during the course of the inspection
- 3. NABARD receives complaints / grievances regarding functioning of the above mentioned banks. These complaints / grievances are attended during the course of the inspection as also in a regular manner by pursuing the matter with the banks. Based on the reply received from the banks, the complainants are advised suitably.
- 4. The department has no consultation with members of Public.
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| (viii) |
A statement of the boards, councils, committees and other bodies consisting of two or more persons constituted as its part or for the purpose of its advice, and as to whether meetings of those boards, councils, committees and other bodies are open to the public, or the minutes of such meetings are accessible for public |
Board of Supervision (BoS)
In exercise of the powers vested by sub-section 3 of Section 13 of the National Bank for Agriculture and Rural Development Act, 1981 (Act 61 of 1981), the Board of Directors of NABARD constituted a Committee to be known as Board of Supervision (for StCBs, DCCBs and RRBs) [BoS] in November 1999 to provide policy guidance and directions on matters relating to supervision of co-operative banks and RRBs.
Constitution of the Committee
The Board of Supervision comprises of the following Members: Chairman, NABARD
| I |
Chairman |
Member |
| II |
Deputy Managing Director in Charge of Department of Supervision, NABARD |
Member |
| III |
Deputy Managing Director, NABARD |
Member |
| IV |
Executive Director in-charge of Supervision , RBI |
Member |
| V |
A Chartered Accountant, preferably Mumbai based to be nominated by the Chairman or in his absence by the DMD in charge of DOS, NABARD. |
Member |
| VI |
An expert in cooperative banking or eminent co-operator not representing any institution, to be nominated by the Chairman or in his absence by the DMD in charge of DOS, NABARD. |
Member |
| VII |
An experienced commercial banker to be nominated by the Chairman or in his absence by the DMD in charge of DOS, NABARD. |
Member Secretary |
| VIII |
CGM, DOS in NABARD |
Member Secretary |
Powers and functions of Board of Supervision
- (i) Give directions and guidance in respect of policies and on matters relating to Supervision and Inspection.
- (ii) Review the inspection findings on banks and suggest appropriate measures.
- (iii) Review the follow-up action taken by the Department of Supervision, NABARD on matters of frauds and Internal Checks and Control.
- (iv) Identify the emerging issues in functioning of Cooperative banks/ RRBs such as NPAs, recovery, investment portfolio, credit monitoring arrangements, management practices, frauds, etc., and suggest necessary follow-up measures.
- (v) Suggest appropriate training for Inspection Officers of NABARD to impart necessary skills and knowledge.
- (vi) Suggest measures for strengthening of Department of Supervision.
- (vii) Suggest suitable amendments to the B.R.Act, 1949 for vesting required powers on NABARD.
- (viii) Recommend issue of Directions by RBI. Oversee the quality of inspections carried out and the reports issued.
- (ix) Reviews the information generated through off-site surveillance and other supplementary vehicles, action taken thereon and give suitable directions.
- (x) Deal with any other matter referred to Board of Supervision.
- (xi) Any other functions to be entrusted by the Board of Directors of NABARD from time to time.
Meetings of Board of Supervision and quorum
The Board of Supervision ordinarily meets once in a quarter at such places as may be decided by the Chairman or in his absence by the DMD in charge of DOS, NABARD from time to time. The Member-Secretary convenes the meeting as per the instructions given by the Chairman or in his absence by the DMD in charge of DOS, NABARD from time to time. At least 10 days’ notice is required to be given to the members to enable them to attend the meeting. The meetings of the BoS are presided over by the Chairman, NABARD and in his absence by the DMD in charge of DOS, NABARD.
The quorum for BoS has been determined as 04 members (02 members from NABARD and 02 members from outside NABARD).
Report to the Board of Directors of NABARD
The minutes of the meetings of the Board of Supervision together with the Action Taken Report (ATR) are submitted to the Board of Directors of NABARD. In addition to the above, Board of Supervision submits to the Board of Directors for their consideration suggestions and recommendations on the strengthening of inspection of RRBs and the cooperative banks in the country and on the various other relevant matters.
Tenure of the Board of Supervision
The Board of Supervision shall function at the pleasure of NABARD.
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| (ix) |
A directory of its officers and employees |
Directory of its Officers and Employees
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| (x) |
The monthly remuneration received by each of its officers and employees, including the system of compensation as provided in its regulations |
Click here
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| (xi) |
Budget allocated to each of its agency, indicating the particulars of all plans, proposed expenditures and reports on disbursements made |
Not applicable to Department of Supervision |
| (xii) |
Manner of execution of subsidy programmes, including the amounts allocated and the details of beneficiaries of such programmes |
Not applicable to Department of Supervision |
| (xiii) |
Particulars of recipients of concessions, permits or authorizations granted by the organizations |
Not applicable to Department of Supervision |
| (xiv) |
Details in respect of the information available to or held by it, reduced in an electronic form |
Copies of Circulars and Inspection Guidelines, Manuals, etc. are held in electronic form. |
| (xv) |
Particulars of facilities available to citizens for obtaining information, including the working hours of a library or reading room, if maintained for public use |
Information is available in public domain on www.nabard.org at below link: Click Here |
| (xvi) |
The names, designations and other particulars of the Public Information Officers |
Details can be obtained from below link RO Locator
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| (xvii) |
Such other information as may be prescribed and thereafter update these publications every year
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Details can be obtained from link given below
RTI
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