Twenty-six Urban Cooperative Banks (UCBs) from Kolhapur district, along with an association, have approached the Bombay High Court’s Kolhapur Bench challenging the retrospective application of the recently amended rule on directors’ tenure in co-op banks. The next hearing on the matter is scheduled for 1st December 2025, i.e., today.
The issue arises from a recent amendment to the Banking Regulation Act, 1949, which increased the maximum continuous tenure of cooperative bank directors, excluding the Chairperson and Whole-time Directors, from eight years to ten years. Introduced through Section 10A(2a)(i), the amendment came into effect on 1 August 2025 and aims to strengthen stability and continuity in governance.
However, the petitioners claim that authorities are now counting the entire past service of directors, including years served before the amendment came into force.
According to the banks, this approach amounts to a retrospective application of the rule, which goes beyond the legislative intent. The amendment, they argue, was meant to operate prospectively, applying only to service after 1 August 2025.
The banks have warned that counting prior years could unfairly disqualify several sitting directors from contesting upcoming UCB elections in Kolhapur. Directors who have already completed ten years before the amendment, or those who may complete ten years during the next term, could be rendered ineligible, despite the rule being designed for future service only.
The petitioners have also expressed concern that new instructions issued for the upcoming elections may lead to unfair disqualification of experienced directors, potentially affecting the administration and governance of the banks.
They allege that authorities have misinterpreted the rule by considering overall tenure instead of focusing only on the period after the amendment came into effect.
It is reported that the petition was filed in the wake of elections of two multi-state banks in Kolhapur, Ajnara Urban Cooperative Bank and Veershaiv Urban Cooperative Bank, where the Cooperative Election Authority is implementing the amended Banking Regulation Act.
Through the petition, the 26 banks and the association have requested the High Court to ensure that directors are not disqualified on the basis of having completed ten years of service before 1 August 2025. They have also sought a temporary stay on the implementation of the recent instructions until the matter is clarified.
The matter, which has already seen a hearing or two, is now listed for the next hearing on 1st December 2025 at the Kolhapur Bench of the Bombay High Court. The petitioners hope the Court will provide clarity on the prospective application of the directors’ tenure amendment and prevent disruption in the upcoming elections.
It is gathered that after the Kolhapur UCB Association, the Maharashtra UCBs Federation is also planning to file a petition in the Bombay High Court against the amended director tenure provision in cooperative banks.