The Reserve Bank of India (RBI) has introduced new rules for directors of Urban Cooperative Banks (UCBs).
Under the updated guidelines, no person will be allowed to remain a director on a bank’s board for more than 10 continuous years.
After completing a 10-year term, the person can return to the board only after taking a mandatory break of three years.
The new rules have come into effect immediately.
Why RBI Introduced These Changes
According to the RBI, some directors were finding ways to stay on bank boards longer than allowed.
In several cases, directors reportedly resigned before completing their term and later got re-elected or nominated again.
This helped them continue in their positions beyond the legal limit.
The central bank believes this practice was against the spirit of proper governance and transparency.
To stop this, RBI has now made the rules stricter.
What Happens During the Cooling-Off Period
Under the revised guidelines, directors who complete 10 consecutive years must stay away from the same bank for at least three years.
During this cooling-off period:
They cannot hold any position in that bank
They cannot be associated with the bank in any official role
They can remain only as a customer or member of the bank
However, RBI clarified that such individuals can still join the board of another bank if they meet the eligibility requirements.
New Guidelines Effective Immediately
The RBI said these updated rules are part of the “Urban Cooperative Banks (Governance) Amendment Guidelines, 2026.”
The central bank has also issued similar governance guidelines separately for Rural Cooperative Banks (RRBs).
The move is expected to improve transparency, strengthen governance, and prevent misuse of board positions in cooperative banks across the country.
