RBI proposes 3-year break for co-op banks' directors after 10 yrs on board

Banking Regulation (Amendment) Act has prescribed a ceiling on the continuous tenure of directors on both state and central co-operative banks and urban co-operative banks, raising it from 8 to 10 yrs

The Reserve Bank of India (RBI) on Thursday proposed that a director on the board of co-operative banks who has served continuously for 10 years can be reappointed to the same board only after a three-year cooling-off period.

 

Also, during this break, the director cannot be involved with the bank in any role except as a regular member or customer. However, this does not stop them from becoming a director on the board of another bank.

 

In its draft circular, the RBI said that for calculating the period of continuous tenure, the total time served on the boards of urban co-operative banks, and state and central co-operative banks will be counted, including periods of directorship before any interruption of less than three years. However, periods of directorship preceding an interruption of at least three years will be excluded.

   

The Banking Regulation (Amendment) Act has prescribed a ceiling on the continuous tenure of directors on both state and central co-operative banks and urban co-operative banks, raising it from eight to 10 years. However, the RBI said that in certain cases, directors have been found resorting to methods to circumvent the provisions of the Act by resigning briefly from office and being re-elected or co-opted to the board within a short period, thereby continuing to remain on the board of a UCB for an extended period beyond the legally permissible tenure.

 

Comments on the draft circular have been invited from public stakeholders by January 30, 2026.