Experts argue three-year cooling period is inadequate to curb board-level manipulation in UCBs
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The regulatory prescription of a minimum three-year cooling-off period after an Urban Cooperative Bank’s director has completed a 10-year continuous term on its board may set in motion a game of musical chairs.Co-operative banking experts opine that some directors, who can no longer continue on UCB boards due to the aforementioned criteria, may plant their own people on the board, get them to resign after three years (despite their term being for five years) and get back on the board.The cooling-off period for the director should have been for five years, and he/she should not have been allowed to become a director on the board of another bank during this period to prevent gaming of the system, experts said.Eligibility NormsAccording to the Reserve Bank of India (Urban Co-operative Banks-Governance) Amendment Directions, 2026, a director on the Board of a UCB, after completing a continuous tenure of ten years in office, will 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.During the cooling-off period, the said director will not be associated with the UCB in any capacity/manner other than as a member/customer. This, however, will not preclude him/her from being appointed as a director on the Board of another bank, if otherwise eligible.Manipulation FearsCo-operative banking expert D Krishna said the three-year cooling-off period will definitely not stop manipulation.“Two banks in a town can have unwritten swap arrangements for persons completing the 10-year stipulation. Bank hopping should have been prohibited in the RBI directions.“A cooling period of a full term of five years would have been a much neater arrangement, which would avoid the practice of filling mid-term vacancies either by election or by nomination and the attendant manipulations,” Krishna said.As of March-end 2025, there were 1,457 UCBs across the country. They collectively had deposits and advances aggregating ₹5,84,415 crore and ₹3,70,225 crore, respectively.Published on May 27, 2026
