The Karnataka Registrar of Cooperative Societies (RCS) has been informed by the State Cooperation Department that powers to disqualify directors of District Central Cooperative Banks (DCCBs) under the Banking Regulation Act, 1949, have not been delegated to the Registrar.
The issue arose following complaints alleging that directors of two DCCBs had continued on their respective boards for more than 10 years despite the tenure restrictions introduced through the Banking Laws (Amendment) Act, 2025.
The Reserve Bank of India (RBI), in a communication to the complainant, stated that the matter had been forwarded to NABARD’s Karnataka Regional Office for necessary action. NABARD subsequently wrote to the Karnataka RCS, requesting it to examine the allegations and take appropriate action.
However, in a communication, the Karnataka Cooperation Department informed the RCS that powers to disqualify directors under the Banking Regulation Act have not been delegated to the Registrar.
The department cited the Supreme Court’s judgment in Pandurang Ganpati Chougule vs. Vishwasrao Patil Murgud Sahakari Bank Ltd. and observed that banking regulation falls within the domain of the Union Government.
It noted that while banking is covered under the Union List, the State Government has not been delegated powers to enforce provisions of the Banking Regulation Act relating to such disqualifications.
According to the department, the directors concerned were elected under the provisions of the Karnataka Cooperative Societies Act, 1959 and the Karnataka Cooperative Societies Rules, 1960. Any disqualification under the state cooperative law could have been considered during the election process by the election authorities. Since the directors were not disqualified under the state law, they were duly elected to the boards.
The communication further noted that Section 29C of the Karnataka Cooperative Societies Act contains provisions relating to disqualification of directors, but does not specifically incorporate the tenure-related provisions contained in the Banking Regulation Act.
The department stated that, in the absence of delegation of powers under the Banking Regulation Act, neither the Karnataka Cooperative Societies Act nor the Rules provide a mechanism for taking action against directors solely on the ground that they have served on the board for more than 10 years.
It also revealed that former Karnataka Chief Minister Siddaramaiah had written to the Central Government on February 27, 2026, seeking clarification regarding the applicability of Section 10A(2A)(i) read with Section 56 of the Banking Regulation Act, 1949, as amended by the Banking Laws (Amendment) Act, 2025. According to the department, no clarification has been received so far.
Pending such clarification and in view of the absence of delegated powers under the Banking Regulation Act, the department informed the RCS that no action could be initiated against the directors on the alleged tenure violation issue.