The Reserve Bank of India (RBI) has released draft amendments to the governance framework for both Urban and Rural Co-operative Banks and has invited public comments on the proposals.
The draft notifications include 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.
The proposed amendments seek to introduce a mandatory minimum cooling-off period of three years for directors of co-operative banks after completion of the maximum permissible continuous tenure of ten years. The tenure requirement is prescribed under Section 10A(2A)(i) read with Section 56 of the Banking Regulation Act, 1949.
For Urban Co-operative Banks, the ceiling on continuous tenure became applicable with effect from June 29, 2020. In the case of Rural Co-operative Banks, comprising State Co-operative Banks and Central Co-operative Banks, the provision came into force from April 1, 2021. The maximum tenure was increased from eight years to ten years through the Banking Laws (Amendment) Act, 2025, which came into effect on August 1, 2025.
The RBI observed that in certain cases, directors attempted to circumvent the statutory tenure limit by resigning for brief periods and returning to the board through re-election or co-option within a short span. According to the central bank, such practices enable directors to continue on the board beyond the legally permissible tenure and defeat the intent and spirit of the law.
To address this issue, the RBI has proposed the insertion of a new provision in the existing Governance Directions, 2025. Under the draft amendments, a director who has completed ten years of continuous tenure on the board of an Urban Co-operative Bank, State Co-operative Bank, or Central Co-operative Bank shall be eligible for re-appointment to the board of the same bank only after undergoing a minimum cooling-off period of three years.
During the cooling-off period, the director shall not be associated with the concerned bank in any capacity other than as a member or customer. However, the draft directions clarify that this restriction will not preclude appointment as a director on the board of another bank.
The RBI has further clarified that, for the purpose of calculating continuous tenure, periods of service separated by interruptions of less than three years shall be reckoned together, while service preceding an interruption of three years or more shall not be included.
The central bank has invited comments and feedback from the public and stakeholders on both draft directions up to January 30, 2026. Feedback may be submitted through the ‘Connect2Regulate’ section on the RBI website or forwarded to the Department of Regulation (Governance Section), Reserve Bank of India, Mumbai, by post or email.
“THE INTENT AND SPIRIT OF THE LAW “ should be explained thoroughly first. Then the comments and feedback from the public and stakeholders be taken over it. If this is largely accepted then invite comments and feedback for 3 years cooling period.
The proposed ammendments of RBI I are ok and should be implemented..RBI should ensure thatbeach coop bank follow these revised guidelines in letter and spirit immediately .
Incidentally, the cap of 70 years foe eligibility criteria for directorship should be removed particularly in respect of persons who have professional background in Banking in the capacity of Senior executive for st least 10 years
The 10 years tenure should be calculated on the date of election or appointment, if he has completed 10 years continuous directorship, he should be disqualified from either contestio or appointment straightly.
These will unable to restrict mischief mongers.
I completely agree with the new regulation of the RBI, as in Cooperative banks a director sitting for more than. 10 years shouldn’t be made to continue as they they try control and misappropriation of funds and even harass the employees with their own rules and regulations I vote FOR this ammendment., which is a must for the smooth running of the Cooperative sector and each one should get an opportunity to service the Cooperative sector of their region. Please do implement.
If a person has already completed 10 years of directorship as on 29.06.2020/01.04.2021 then wheather he/she will be allowed to serve for further 10 years or will become ineligible from the cut of date as given above. In nutshel whether this providon/amendment is retrospectively or prospectively.
Subject: Representation on Prospective Implementation of Cooling-Off Period for Directors of District Central Co-operative Banks (DCCBs)
We respectfully submit our views on the draft governance amendment directions issued by the Reserve Bank of India proposing a cooling-off period for directors of co-operative banks, with specific reference to District Central Co-operative Banks (DCCBs).
At the outset, we fully appreciate and support the regulatory intent behind the proposed measures, which aim to strengthen governance standards, transparency, and long-term sustainability of the co-operative banking sector. At the same time, we humbly submit that the proposed cooling-off provisions may kindly be implemented prospectively from the date of final notification, and not applied retrospectively by counting past tenures.
DCCBs form the backbone of the rural and agricultural credit structure, acting as a vital link between Primary Agricultural Credit Societies (PACS) and the State Co-operative Bank. Their effective functioning depends substantially on experienced leadership, institutional memory, and deep familiarity with banking regulations, NABARD supervision, audit processes, and recovery mechanisms.
In many DCCBs, the Boards comprise Members of Parliament, Members of the Legislative Assembly, Ministers, and senior co-operative sector experts, who bring with them:
extensive experience in public administration and co-operative governance,
deep understanding of rural credit needs and agricultural cycles,
strong credibility among members, borrowers, and depositors, and
the ability to provide leadership during financial stress or recovery challenges.
The confidence and trust of depositors in DCCBs is often closely associated with such leadership. Their presence on the Board has historically had a positive influence on credit discipline, loan recovery , effective credit distribution , and overall growth of co-operative banks. This leadership continuity has been a key factor in enabling many DCCBs to expand safely and serve rural communities effectively over time.
If the cooling-off provisions are applied retrospectively, a significant number of such experienced and respected directors may be required to step down simultaneously. This could result in:
sudden loss of institutional knowledge,
dilution of depositor confidence,
weakening of recovery efforts,
disruption in PACS supervision and rural credit flow, and
increased governance and compliance risks during the transition period.
While induction of new directors is essential for renewal and inclusiveness, banking governance and regulatory compliance require time, training, and exposure. An abrupt replacement of experienced boards with newly inducted members, though well-intentioned, may unintentionally affect operational stability and depositor protection.
A prospective implementation of the cooling-off requirement would enable:
an orderly and phased leadership transition,
capacity building and orientation of new directors,
continuity in recovery and credit operations, and
effective safeguarding of depositor rights.
Such an approach would harmoniously balance the objective of governance reform with the practical realities of co-operative banking, while preserving the strengths that have allowed DCCBs to grow, remain stable, and serve rural India responsibly.
We therefore respectfully request RBI and NABARD to consider prospective applicability of the proposed cooling-off norms in the interest of financial stability, depositor protection, and uninterrupted rural credit delivery.
We remain fully committed to complying with the final directions as may be issued.
This amendment bill of RBI is acceptable.
It is necessary for cooperative banks. so it should be imlement. And sutch a person should be given a chance those who have a professional background in banking and have been senior executives for at least 10 years. I accept it.
Date of implementation should be declared ie
With effect from …….,