Mumbai, An individual cannot serve as a director continuously for more than 10 years on the board of Urban Co-operative Banks, and the re-appointment can happen only after a compulsory three-year cooling-off period, according to the RBI.Amending the provisions, the Reserve Bank of India (RBI) on Monday said there have been instances where directors resorted to circumventing statutory provisions to continue on the boards of the UCBs.In certain cases, the RBI said directors resigned briefly from office and got reelected/co-opted to the board within a short period, thereby continuing to be on the Board for an extended period beyond the legally permissible tenure.The Reserve Bank of India (Urban Co-operative Banks - Governance) Amendment Directions, 2026, have come into force with immediate effect."A director on the Board of a UCB, after completing a continuous tenure of ten years in office, shall be eligible to be re-appointed, whether by election or co-option or in any other manner, as a director on the Board of the same UCB only after undergoing a minimum cooling-off period of three years," according to the directions.During the cooling-off period, the said director shall not be associated with the UCB in any capacity/manner other than as a member/ customer, it added."This, however, shall not preclude him/her from being appointed as a director on the Board of another bank, if otherwise eligible," the RBI said.Similar directions have been separately issued for Rural Co-operative Banks (RRBs).
RBI tightens norms for re-appointment of directors on UCB boards
The Reserve Bank of India has introduced new rules for Urban Co-operative Banks. Directors can now serve for a maximum of ten years. Following this, a mandatory three-year cooling-off period is required before re-appointment. This measure aims to prevent directors from circumventing tenure limits. The new directions are effective immediately, ensuring better governance in these financial institutions.
The RBI has amended its governance rules for Urban Co-operative Banks (UCBs), capping continuous board tenure at 10 years and mandating a minimum 3-year cooling-off period before re-appointment, effective immediately. The move targets a documented pattern of directors circumventing statutory limits via brief resignations, signaling tighter regulatory scrutiny on cooperative bank governance that compliance and risk officers should factor into board succession planning.
