Reserve Bank of India (Urban Co-operative Banks - Governance) Amendment Directions, 2026 · RBI/DOR/2026-27/94
RBI notification RBI/DOR/2026-27/94 · 25 May 2026
RBI notification RBI/DOR/2026-27/94 · 25 May 2026
Summary
Check the official recordThe Reserve Bank of India amends governance directions for Urban Co-operative Banks. The amendment mandates a three-year cooling-off period for directors who complete a ten-year continuous tenure. During this period, the director cannot hold any position in the bank except as a member or customer. The bank calculates continuous tenure by including all time served on the board. It excludes any period of directorship that follows an interruption of at least three years. These directions apply to all Urban Co-operative Banks and take effect immediately.
What you must do
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RBI/DOR/2026-27/94 DOR.GOV.REC.No.82/18.10.014/2026-27 May 25, 2026
Reserve Bank of India (Urban Co-operative Banks - Governance) Amendment Directions, 2026
The Reserve Bank had issued Reserve Bank of India (Urban Co-operative Banks - Governance) Directions, 2025 on November 28, 2025. Chapter-II of these directions have provisions regarding the Constitution of Board and Appointment of Directors.
The Banking Regulation (Amendment) Act, 2020 had made Section 10A(2A)(i) of the Banking Regulation Act, 1949 (in short, “the Act”), which prescribed a ceiling on continuous tenure of directors, applicable to primary (urban) co-operative banks (hereinafter collectively referred to as ‘UCBs’ and individually as ‘UCB’). The provision had come into force for UCBs with effect from June 29, 2020. This provision was further amended by the Banking Laws (Amendment) Act, 2025 to increase the maximum continuous tenure of directors of UCBs from eight years to ten years and the amended provision has come into effect on August 1, 2025.
In a few cases, directors have been found to be resorting to certain methods to circumvent the provisions of the Act, such as resigning briefly from office and being re-elected / co-opted to the Board within a short period of time, thereby continuing to be on the Board of a UCB for an extended period beyond the legally permissible tenure, which defeats the intent and spirit of the statutory provision.
Accordingly, in exercise of the powers conferred by Section 35A read with Section 10A(2A)(i) and Section 56 of the Act, and all other provisions / laws enabling the Reserve Bank of India (‘RBI’) in this regard, RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby issues these Directions hereinafter specified.
(1) These Directions shall be called the Reserve Bank of India (Urban Co-operative Banks - Governance) Amendment Directions, 2026.
(2) These Directions shall come into force with immediate effect.
(3) These Directions shall modify the Reserve Bank of India (Urban Co-operative Banks - Governance) Directions, 2025 in the manner as specified hereinafter.
(4) After paragraph 7 of the Reserve Bank of India (Urban Co-operative Banks - Governance) Directions, 2025, the following shall be inserted, namely:
“7A. 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. 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. This, however, shall not preclude him / her from being appointed as a director on the Board of another bank, if otherwise eligible.
Explanation: For calculating the period of continuous tenure, the total time served on the Board of the UCB including the period of directorship preceding an interruption of less than three years but excluding the period of directorship preceding at least a three-year interruption shall be reckoned.”
(Scenta Joy) Chief General Manager