**Executive Summary**
The Reserve Bank of India (RBI) issues the (Rural Co-operative Banks - Governance) Amendment Directions, 2026, effective immediately. These directions modify the RBI's 2025 directions concerning the constitution of the Board for State Cooperative Banks (StCBs) and Central Cooperative Banks (CCBs). This amendment addresses the circumvention of tenure limits for directors by instituting a cooling-off period.
**Key Points / Main Content**
* **Purpose:** To amend the Reserve Bank of India (Rural Co-operative Banks - Governance) Directions, 2025.
* **Amendment to 2025 Directions:** These directions modify the Reserve Bank of India (Rural Co-operative Banks - Governance) Directions, 2025.
* **Director Tenure and Re-Appointment:**
* A director completing a continuous 10-year tenure on the Board of a StCB/CCB can only be re-appointed after a mandatory three-year cooling-off period.
* During the cooling-off period, the director cannot be associated with the StCB/CCB in any capacity other than as a member/customer.
* Serving on the Board of another bank is permitted during the cooling-off period.
* The total time served on the Board of the StCB / CCB including the period of directorship preceding an interruption of less than three years but excluding the period of directorship preceding at least a three-year interruption shall be reckoned.
**Impact Analysis**
**Stakeholder: Directors of StCBs/CCBs**
* **Impact:** Directors completing a 10-year tenure face a mandatory cooling-off period before re-appointment to the same StCB/CCB board. This will affect their ability to continuously serve on the board without interruption.
* **Action Required:** Directors must adhere to the three-year cooling-off period requirement and refrain from associating with the StCB/CCB during this period, except as a member or customer.
**Stakeholder: StCBs/CCBs**
* **Impact:** These directions impact the constitution of their Boards and governance practices, ensuring compliance with the cooling-off period rule for director re-appointments.
* **Action Required:** StCBs/CCBs must implement procedures to ensure compliance with the cooling-off period requirement when re-appointing directors.
**Stakeholder: Reserve Bank of India**
* **Impact:** These directions ensure compliance with banking regulations.
* **Action Required:** Enforce and monitor compliance with the new directions.
Key Entities Referenced
Reserve Bank of India: The issuing authority and regulator of the directions.
Reserve Bank of India (Rural Co-operative Banks - Governance) Directions, 2026: The primary subject of the document, amending previous directions.
Reserve Bank of India (Rural Co-operative Banks - Governance) Directions, 2025: The document being amended by the 2026 directions.
Banking Regulation Act, 1949: The foundational act referenced, specifically regarding director tenure.
State Co-operative banks (StCBs) and Central Co-operative banks (CCBs): The types of banks to which the directions apply.
DRAFT
Reserve Bank of India (Rural Co-operative Banks - Governance) Amendment
Directions, 2026
Please refer to Reserve Bank of India (Rural Co-operative Banks - Governance)
Directions, 2025 (DOR.GOV.REC.No.217/18-10-015/2025-26) dated November 28,
2025. Chapter-II of these directions have provisions regarding the Constitution of
Board.
2. The Banking Regulation (Amendment) Act, 2020 had made section 10A(2A)(i) of
the Banking Regulation Act, 1949 (in short, “the Act”), which prescribed a ceiling on
continuous tenure of directors, applicable to State Co-operative banks (hereinafter
collectively referred to as ‘StCBs’ and individually as ‘StCB’) and Central Co-operative
banks (hereinafter collectively referred to as ‘CCBs’ and individually as ‘CCB’). The
provision had come into force for StCBs and CCBs with effect from April 1, 2021. This
provision was further amended by the Banking Laws (Amendment) Act, 2025 to
increase the maximum continuous tenure of directors of StCBs and CCBs from eight
years to 10 years and the amended provision has come into effect on August 1, 2025.
3. In a few cases, directors have been found to be resorting to certain methods to
circumvent the provisions of the Act such as resigning briefly from office and being re-
elected / co-opted to the Board within a short period of time, thereby continuing to be
on the Board of a StCB / CCB for an extended period beyond the legally permissible
tenure, which defeats the intent and spirit of the statutory provision.
4. Accordingly, in exercise of the powers conferred by Section 35A read with Section
10A(2A)(i) and Section 56 of the Act, and all other provisions / laws enabling the
Reserve Bank of India in this regard, Reserve Bank of India being satisfied that it is
necessary and expedient in the public interest so to do, hereby issues these Directions
hereinafter specified.
(1) These Directions shall be called the Reserve Bank of India (Rural Co-operative
Banks - Governance) Amendment Directions, 2026.
(2) These Directions shall come into force with immediate effect.
(3) These Directions shall modify the Reserve Bank of India (Rural Co-operative
Banks - Governance) Directions, 2025 in the manner as specified hereinafter.(4) After paragraph 7 of the Reserve Bank of India (Rural Co-operative Banks -
Governance) Directions, 2025, the following shall be inserted:
7A. A director on the Board of a StCB / CCB, after completing a continuous
tenure of 10 years in office, shall be eligible to be re-appointed, whether by
election or co-option or in any other manner, as a director on the Board of the
same StCB / CCB only after undergoing a minimum cooling-off period of three
years. During the cooling-off period, the said director shall not be associated
with the StCB / CCB in any capacity / manner other than as a member /
customer. This, however, shall not preclude him / her from being appointed as
a director on the Board of another bank.
Explanation:
For calculating the period of continuous tenure, the total time served on the
Board of the StCB / CCB including the period of directorship preceding an
interruption of less than three years but excluding the period of directorship
preceding at least a three-year interruption shall be reckoned.
Yours faithfully,
( )
Chief General Manager