**Executive Summary**
The Reserve Bank of India (RBI) has issued Amendment Directions in 2026 concerning the governance of Urban Co-operative Banks (UCBs). These directions, effective immediately, modify the 2025 Directions to prevent circumvention of director tenure limits. They introduce a mandatory cooling-off period for directors seeking reappointment after serving the maximum continuous tenure.
**Key Points / Main Content**
* **Title and Scope:**
* These are the Reserve Bank of India (Urban Co-operative Banks - Governance) Amendment Directions, 2026.
* They modify the Reserve Bank of India (Urban Co-operative Banks - Governance) Directions, 2025.
* **Effective Date:** These Directions are effective immediately.
* **Director Tenure and Cooling-Off Period:**
* A director of a UCB can be re-appointed to the same UCB after a continuous tenure of 10 years only after a cooling-off period of three years.
* During the cooling-off period, the director cannot be associated with the UCB in any capacity except as a member or customer.
* The cooling-off period does not prevent appointment as a director of another bank.
* When calculating continuous tenure, include periods of directorship interrupted by less than three years, but exclude any period of directorship that was preceded by at least a three-year interruption.
**Impact Analysis**
**Urban Co-operative Banks (UCBs)**
* **Impact:** UCBs need to ensure compliance with the new cooling-off period for directors. This might require changes to their governance structures and appointment processes.
* **Action Required:** Implement changes to comply with the new cooling-off period requirements.
**Directors of Urban Co-operative Banks**
* **Impact:** Directors completing a 10-year continuous tenure will be subject to a three-year cooling-off period before being eligible for reappointment to the same UCB.
* **Action Required:** Be aware of the cooling-off period requirements and their implications for future appointments.
**Reserve Bank of India (RBI)**
* **Impact:** The RBI is reinforcing its oversight to prevent the circumvention of the Act.
* **Action Required:** Monitor UCB compliance.
Key Entities Referenced
Reserve Bank of India (Urban Co-operative Banks - Governance) Amendment Directions, 2026: The policy itself, which amends the 2025 Directions regarding the governance of urban co-operative banks.
Reserve Bank of India (Urban Co-operative Banks - Governance) Directions, 2025: The Directions that are being amended by the 2026 Amendment Directions.
Banking Regulation (Amendment) Act, 2020: Amended the Banking Regulation Act and made section 10A(2A)(i).
Urban Co-operative Banks (UCBs): The type of banks to which these regulations apply.
Banking Laws (Amendment) Act, 2025: Act that further amended the provisions regarding the tenure of directors in UCBs.
DRAFT
Reserve Bank of India (Urban Co-operative Banks - Governance) Amendment
Directions, 2026
Please refer to Reserve Bank of India (Urban Co-operative Banks - Governance)
Directions, 2025 (DOR.GOV.REC.No.192/18-10-014/2025-26) dated November 28,
2025. Chapter-II of these directions have provisions regarding the Constitution of
Board and Appointment of Directors.
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 primary (urban) co-operative banks
(hereinafter collectively referred to as ‘UCBs’ and individually as ‘UCB’). The provision
had come into force for UCBs with effect from June 29, 2020. This provision was
further amended by the Banking Laws (Amendment) Act, 2025 to increase the
maximum continuous tenure of directors of UCBs 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 UCB 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 (Urban 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 (Urban Co-operative
Banks - Governance) Directions, 2025 in the manner as specified hereinafter.
(4) After paragraph 7 of the Reserve Bank of India (Urban Co-operative Banks -
Governance) Directions, 2025, the following shall be inserted:7A. A director on the Board of a UCB, 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 UCB
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 UCB 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 UCB 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