RBI Introduces Three-Year Cooling-Off Period For Co-Operative Bank Directors

The Reserve Bank of India (RBI) has revised governance norms for urban and rural co-operative banks, requiring Directors to step down after completing a continuous tenure of 10 years and remain off the Board for a three-year cooling-off period before becoming eligible for reappointment at the same bank.

The move follows observations by the central bank that some Directors were resigning briefly and returning to the Board through re-election, allowing them to continue beyond the tenure limit prescribed under the Banking Regulation Act, 1949. According to the RBI, such practices undermined the intent of the law governing Board tenures. Under the revised framework, Directors serving the cooling-off period cannot hold any position or association with the bank other than as a member or customer. However, they may serve on the Board of another co-operative bank if they meet the eligibility criteria.

The changes have been notified through the RBI (Urban Co-operative Banks – Governance) Amendment Directions, 2026, and the RBI (Rural Co-operative Banks – Governance) Amendment Directions, 2026.