**Executive Summary**
The Reserve Bank of India (RBI) has issued the Urban Co-operative Banks (UCB) Governance Amendment Directions, 2026, effective immediately. These directions amend the UCB Governance Directions, 2025, to address concerns regarding directors circumventing tenure limits. The key amendment introduces a mandatory cooling-off period for directors after serving a continuous tenure of 10 years.
**Key Points / Main Content**
* **Amendment Title:** Reserve Bank of India (Urban Co-operative Banks - Governance) Amendment Directions, 2026.
* **Effective Date:** Immediate.
* **Governing Act:** Section 35A, Section 10A(2A)(i) and Section 56 of The Banking Regulation Act, 1949.
* **Amendments to the UCB Governance Directions, 2025:**
* **Cooling-Off Period:** After a continuous tenure of 10 years, a director is eligible for re-appointment to the Board of the same UCB only after a minimum cooling-off period of three years.
* **Restrictions During Cooling-Off:** During the cooling-off period, the director cannot be associated with the UCB in any capacity other than as a member or customer.
* **Exception:** The cooling-off period does not prevent the director from being appointed to the Board of another bank.
* **Calculating Continuous Tenure:** Include directorship preceding interruptions of less than three years, and exclude any period preceding an interruption of three years or more.
**Impact Analysis**
**Stakeholder: Directors of Urban Co-operative Banks (UCBs)**
* **Impact:** Directors are subject to a mandatory cooling-off period of three years after serving a continuous tenure of 10 years. This affects their eligibility for immediate re-appointment and limits their association with the UCB during the cooling-off period.
* **Action Required:** Comply with the cooling-off period requirement and associated restrictions after completing a continuous tenure of 10 years.
Key Entities Referenced
Reserve Bank of India (Urban Co-operative Banks - Governance) Amendment Directions, 2026: The primary subject of the document, these directions outline amendments related to the governance of Urban Co-operative Banks (UCBs).
Reserve Bank of India (Urban Co-operative Banks - Governance) Directions, 2025: The directions that the 2026 amendment modifies.
Banking Regulation Act, 1949: The foundational Act being amended.
Banking Regulation (Amendment) Act, 2020: Act that made the initial amendment prescribing tenure limits for directors of Urban Co-operative Banks.
Banking Laws (Amendment) Act, 2025: Further amended the Banking Regulation Act to increase the maximum tenure of directors.
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