In a significant development for the urban cooperative banking sector, Laxmi Das, President of the National Federation of Urban Co-operative Banks and Credit Societies Ltd. (NAFCUB), met Anand Kumar Jha on Thursday at Atal Akshay Urja Bhawan and raised serious concerns over the implementation of the amended provisions of the Banking Regulation Act Amendment relating to the tenure of directors in Urban Cooperative Banks (UCBs).
During the meeting, Das pointed out that the amended provisions applicable to Urban Cooperative Banks were notified through a Gazette notification on August 1, 2025, after being passed by both Houses of Parliament. However, he argued that the provisions should be implemented prospectively and not retrospectively.
Das said boards of directors of Urban Cooperative Banks that were elected before August 1, 2025, should be allowed to complete their full elected tenure without disruption.
He expressed concern that during RBI inspections, officials are insisting on immediate compliance with the amended provisions of the Banking Regulation Act. According to Das, directors are being asked to vacate their positions after completing ten years in office even in cases where the boards were elected before August 1, 2025, when the amended provisions came into effect.
NAFCUB fears that such an interpretation could create instability and administrative uncertainty in the cooperative banking sector, particularly in Urban Cooperative Banks where elected boards are already functioning under valid mandates.
Das urged the Office of the Central Registrar of Cooperative Societies (CRCS) to intervene and issue a formal communication to the Reserve Bank of India seeking clarity on the matter.
He requested that boards elected before August 1, 2025, be permitted to continue until the completion of their original term to avoid unnecessary disruption in the functioning of cooperative banks.
Das also raised key concerns regarding the Multi-State Cooperative Societies Act Amendment 2023, particularly provisions related to the appointment of administrators. During the meeting, he urged the authorities to restore provisions that existed prior to the 2023 amendment.
He pointed out that under the earlier framework, no administrator could be appointed merely due to delays in elections to multi-state cooperative societies. However, the amended Act now permits the appointment of administrators in such situations, a move he termed detrimental to the autonomy and democratic functioning of cooperatives.