RBI MANDATES COOLING-OFF PERIOD BEFORE REAPPOINTMENT OF DIRECTORS OF UBC/RCB
On 25.05.2026, the Reserve Bank of India (“RBI”) issued amendments to the directions on the governance of Urban Co-operative Banks (“UCBs”) and Rural Co-operative Banks (“RCBs”). The amendments seek to strengthen the implementation of Section 10A(2A)(i) read with Section 56 of the Banking Regulation Act, 1949, which deals with the tenure and reappointment restrictions of directors in co-operative banks.
Prior to issuing the amendments, the RBI on 8th January 2026 had released the Draft Reserve Bank of India (Urban Co-operative Banks – Governance) Amendment Directions, 2026 and the Draft Reserve Bank of India (Rural Co-operative Banks – Governance) Amendment Directions, 2026, inviting comments and feedback from stakeholders.
Pursuant to the amended directions, an individual shall not serve continuously as a director on the board of a UCB or RCB for a period exceeding 10 years. Reappointment of such an individual shall only be permissible after completion of a mandatory cooling-off period of three years.
The amended directions also clarifies regarding the calculation of continuous tenure. The total period served on the Board of the UCB/RCB shall include any period of directorship preceding an interruption of less than three years. However, any period of directorship preceding an interruption of at least three years shall be excluded from such calculation.
Further, during the cooling-off period, the concerned individual shall not be associated with the UCB/RCB in any capacity or manner, except as a member or customer. However, such a restriction shall not prevent the individual from being appointed as a director on the board of another bank.
The amended directions have come into force with immediate effect and are intended to ensure that directors do not continue on the boards of co-operative banks beyond the legally permissible tenure.
neha@pjlaw.in
Disclaimer: The views expressed herein are solely for legal research purposes and do not constitute legal opinion, legal advice, solicitation, or professional guidance of any nature. The views are personal to the author and do not necessarily reflect those of PJ Law Offices (www.pjlaw.in), its principal, representatives, associates, retainers, affiliates(collectively, “PJLaw”). Readers are advised to seek independent legal counsel before acting on any information contained herein. PJLaw makes no representation or warranty, express or implied, regarding the accuracy or completeness of the contents and expressly disclaims all liability arising from reliance upon or use of the same.
