**Executive Summary**
The Reserve Bank of India (RBI) issues the "Rural Co-operative Banks - Governance Amendment Directions, 2026" to amend the existing "Rural Co-operative Banks - Governance Directions, 2025." These directions aim to prevent the circumvention of director tenure limits in State Co-operative Banks (StCBs) and Central Co-operative Banks (CCBs). The directions take immediate effect.
**Key Points / Main Content**
* **Purpose and Authority:** These directions are issued under the authority of Section 35A, Section 10A(2A)(i), and Section 56 of the Banking Regulation Act and other enabling provisions.
* **Amendment to 2025 Directions:** The 2026 directions modify the Reserve Bank of India (Rural Co-operative Banks - Governance) Directions, 2025.
* **Cooling-Off Period for Directors:**
* After completing a continuous tenure of 10 years on the Board of a StCB or CCB, a director is eligible for reappointment only after a minimum cooling-off period of three years.
* During the cooling-off period, the director cannot be associated with the StCB/CCB in any capacity other than as a member or customer.
* However, the cooling off period does not preclude the director from being appointed on the Board of another bank.
* **Calculation of Continuous Tenure:** To calculate continuous tenure, all time served on the Board of the StCB/CCB is included, even if there was an interruption of less than three years. If there was an interruption of at least 3 years, the period preceding the interruption is excluded.
**Impact Analysis**
**Stakeholder: Directors of StCBs and CCBs**
* **Impact:** The directions impact directors by restricting their eligibility for reappointment after serving 10 years unless they undergo a mandatory cooling-off period. This affects their ability to continuously serve on the board.
* **Action Required:** Directors need to be aware of the new cooling-off period requirement before they consider re-appointment.
**Stakeholder: StCBs and CCBs**
* **Impact:** The directions impact StCBs and CCBs by introducing new restrictions to the eligibility of their board of directors.
* **Action Required:** StCBs and CCBs need to ensure compliance with the new cooling-off period requirements when appointing or reappointing directors.
**Stakeholder: Reserve Bank of India**
* **Impact:** The RBI is now responsible for enforcing and monitoring the implementation of these new directions.
* **Action Required:** Monitor the implementation of these directions.
Key Entities Referenced
Reserve Bank of India (Rural Co-operative Banks - Governance) Amendment Directions, 2026: The primary subject of the document, outlining amendments related to governance of rural co-operative banks.
Reserve Bank of India (Rural Co-operative Banks - Governance) Directions, 2025: The directions being amended by the 2026 amendment, serving as the base policy.
Banking Regulation Act, 1949: Underlying legislation impacted, specifically concerning tenure of directors in co-operative banks.
Banking Regulation (Amendment) Act, 2020: Act that made section 10A(2A)(i) which prescribed a ceiling on continuous tenure of directors, applicable to State Co-operative banks.
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