In the Reserve Bank of India (Urban Co-operative Banks – Governance) Amendment Directions, 2026, released on May 25, the central bank indicated that this initiative aims to thwart efforts to evade existing tenure limits via brief resignations and rapid reappointments.
The updated directions take effect immediately and amend the previous Reserve Bank of India (Urban Co-operative Banks – Governance) Directions, 2025.
According to the new framework, a director who has served 10 consecutive years on a UCB board can be reappointed—whether by election, co-option, or other means—only after a mandatory cooling-off period of three years. During this cooling-off phase, the individual is prohibited from holding any role within the same UCB except as a member or customer, according to the RBI. Nonetheless, these individuals may serve as directors on the boards of other banks if they fulfill the eligibility criteria.
The RBI observed instances where directors had resigned temporarily and subsequently returned to the board shortly thereafter, thereby extending their tenure beyond the legally allowed duration.
“To evade the provisions of the Act,” some directors had engaged in “brief resignations from office, followed by re-election/co-option to the Board within a short timeframe,” the central bank noted in the notification.
The RBI also provided clarification on how continuous tenure is determined. The total time served on the board will encompass any previous periods joined by breaks of less than three years. However, service before an interruption of at least three years will be excluded from the count.
The revisions follow updates made through the Banking Laws (Amendment) Act, 2025, which raised the maximum continuous tenure for directors of UCBs from eight years to 10 years, effective August 1, 2025. The initial provision under Section 10A(2A)(i) of the Banking Regulation Act was applicable to UCBs starting June 29, 2020.
The RBI mentioned that similar directives have also been issued for rural co-operative banks.
