Union Finance Minister Nirmala Sitharaman said the Cooperative Election Authority will oversee the implementation of the amended provision of Section 10A (sub-section 2A(i)) of the Banking Regulation Act, 1949 in the case of multi-State cooperative banks.
She clarified that the maximum continuous tenure for directors, excluding chairpersons and whole-time directors, has been extended from eight to ten years under the amendment, which has come into effect from 1st August, 2025.
Responding to a query from Rajya Sabha MP Shaktisinh Gohil on directors’ tenure in cooperative banks, Sitharaman informed the Rajya Sabha in her written reply that 876 directors in 145 urban cooperative banks (UCBs) across Gujarat have been serving for more than eight years. In addition, 169 directors, including those in the Gujarat State Cooperative Bank and 15 District Central Cooperative Banks (DCCBs), have also crossed this limit.
According to data from NABARD and the RBI, several banks have a high number of long-serving directors. These include Gandhidham Mercantile Cooperative Bank Ltd. (13 directors), Mehmadabad Urban People’s Cooperative Bank Ltd. (13 directors), and Talod Nagarik Sahakari Bank Ltd. (13 directors), among others with between eight and 12 such directors.
In the DCCB category, Ahmedabad (19 directors), Amreli, Rajkot, and Junagadh (16 each), and the Gujarat State Cooperative Bank (15) were among those listed.
Sitharaman further emphasised that cooperative banks have to adhere to the qualifications set for their Chairpersons and Board of Directors. The RBI has been given the authority to remove a Chairperson deemed unfit and to direct the reconstitution of the Board if necessary.
Further, the RBI’s authority to supersede the Board of Directors has been extended to all cooperative banks. For state-registered banks, this action is to be taken in consultation with the state government.
“Cooperative banks are required to undergo audits similar to those of scheduled commercial banks, with the RBI having the authority to order special audits and oversee the winding-up process,” she added.
The Union Finance Minister said, “Cooperative banks are allowed to raise equity and unsecured debt capital from the public with prior RBI approval, enhancing their financial stability and operational capacity.”
Observers note that the extension of the tenure limit could regularise the position of many current directors, not only in Gujarat but across the country, while maintaining strict RBI oversight to uphold governance standards.
In commercial banks,the process of appointment/ selection is entirely different in consonants either corporate sector.while in co op banks the management i&chairman and board are elected by the members through a democratic process like parliament,legislatures and local self govt bodies.FM is allegedly illiterate and lacks common sense.
I have a doubt. If a director or its Chairman completed two terms(10 years), will they be eligible to contest elections if they are held after August 25?
The next elections for BOD are scheduled in December 2029. By that time four of the BOD will complete 9 years and two Directors Complete ten years, another two Directors Complete only five years. What would be the status of their eligibility for elections scheduled in December 2029. Please explain with illustrations for better understanding.