The Reserve Bank of India (RBI) has updated its directions on the tenure of directors at urban and rural co-operative banks. Directors must step down and observe a three-year cooling off period after serving on the board for a continuous tenure of 10 years.
The RBI had observed instances where directors were found to resort to certain methods to circumvent the provisions of the Banking Regulation Act, 1949, which prescribed a ceiling on the continuous tenure of directors. The directors would briefly resign from office and were re-elected within a short period of time thereby continuing to be on the board beyond the legally permissible tenure, defeating the intent and spirit of the statutory provision.
During the cooling off period a director cannot be associated with the bank in any capacity other than as a member/customer. However, he/she may be appointed as a director on the board of another bank, if otherwise eligible.
These directions were issued in Reserve Bank of India (Urban Co-operative Banks – Governance) Amendment Directions, 2026 and Reserve Bank of India (Rural Co-operative Banks – Governance) Amendment Directions, 2026.
