Don’t donate to trusts where directors hold post: RBI to coop banks

The Reserve Bank on Friday directed the Urban Co-operative Banks (UCBs) to stop giving donations to trusts and institutions where directors or their relatives hold positions or have interests.

“...UCBs are, with immediate effect, prohibited from giving donations to Trusts and Institutions, where directors, and/or their relatives hold position or are interested, even within the permissible ceiling of 1 per cent of the published profits of the bank for the previous year,” RBI said in a notification.

The RBI said it was brought to its notice that some of the UCBs made contributions which were in nature of donations to the trusts or charitable in which the directors or relatives were interested in.

As per earlier directive, UCBs were allowed for normal donations that could be made during a year with restriction of a ceiling of 1 per cent of the profits of the bank in the previous year.