RBI New Rule: Reserve Bank changed the rules for cooperative banks, know..

The Reserve Bank of India (RBI), while amending the regulations regarding the tenure of directors in Urban Cooperative Banks (UCBs), has stated that no individual may serve as a director on the Board of Directors for a continuous period exceeding 10 years. In revised guidelines issued on Monday, the central bank stated that following the completion of a 10-year tenure, a director may be reappointed only after observing a mandatory ‘cooling-off’ period of three years.

The RBI noted that instances had come to light where directors of Urban Cooperative Banks would circumvent legal provisions—by resigning midway through their term only to be promptly re-elected or co-opted—in order to continue serving on the Board of Directors. This allowed them to remain in office for a duration exceeding the prescribed limit. Under the new regulations, during this mandatory interval (cooling-off period), the concerned individual shall not be associated with the bank in any capacity; they may engage with the bank solely as a member or a customer.

However, provided they meet the eligibility criteria, such an individual may serve as a director on the Board of Directors of another bank during the cooling-off period. The RBI announced that the ‘Urban Cooperative Banks (Governance) Amendment Guidelines, 2026’ have come into effect immediately. Similar guidelines have also been issued separately for Rural Cooperative Banks (RRBs).

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