The Karnataka High Court has adjourned to August 6, 2026, the hearing in a writ petition filed by Nyayamitra Sahakari Bank Niyamitha, challenging the validity of the Reserve Bank of India’s (RBI) governance directions relating to the tenure of directors of cooperative banks.
The petition, pending before Justice R. Nataraj, was listed for a preliminary hearing on July 31, but the matter was adjourned due to no sitting. The case has been tagged with several similar petitions, suggesting that the High Court is considering a wider challenge to the RBI’s governance framework for cooperative banks.
In its petition, the bank has questioned the legality of RBI Circular RBI.DOR/2025-26/273 dated November 28, 2025, and the subsequent Circular RBI/DOR/2026-27/94 dated May 25, 2026. It has argued that the circulars are ultra vires the powers conferred on the RBI under the Banking Regulation Act, 1949.
The petitioner has contended that matters concerning the management, governance and tenure of directors of cooperative societies fall within the legislative domain of the States under Entry 32 of the State List and are governed by the Karnataka Cooperative Societies Act, 1959. Accordingly, it has sought quashing of the two RBI circulars and an interim stay on their implementation.
Earlier, on June 15, the High Court had issued notices to the Union of India, the RBI and the State Government. The Court had also restrained the respondents from taking any coercive action against the petitioner until the next date of hearing.
The outcome of the case is expected to have significant implications for cooperative banks, particularly on the extent of the RBI’s regulatory powers over governance and directors’ tenure.
