RBI Introduces Strict Rules for UCB Directors

Reserve Bank of India has introduced strict new guidelines for the boards of Urban Cooperative Banks (UCBs). According to the revised rules, a person cannot continue as a director on a UCB board for more than 10 consecutive years. The RBI also stated that after completing the tenure, a mandatory cooling-off period of three years must be observed before the person can contest again for the same bank’s board.

The central bank observed that in some UCBs, directors were temporarily resigning and getting re-elected within a short period to bypass legal tenure limits. The new rules are aimed at preventing such practices. During the cooling-off period, the former director can remain associated with the bank only as a customer or member. RBI has also issued similar guidelines for Regional Rural Banks.