RBI Update - Reserve Bank of India (Rural Co-operative Banks - Governance) Amendment Directions, 2026

The Reserve Bank of India has issued the Reserve Bank of India (Rural Co-operative Banks – Governance) Amendment Directions, 2026, with immediate effect, amending the RBI (Rural Co operative Banks – Governance) Directions, 2025. The amendment follows the Banking Laws (Amendment) Act, 2025, which increased the maximum continuous tenure of directors of State Co operative Banks (StCBs) and Central Co- operative Banks (CCBs) from eight years to ten years with effect from August 1, 2025. To prevent circumvention of the statutory tenure limits through brief resignations and reappointments, RBI has inserted a new paragraph 7A prescribing that a director, upon completing a continuous tenure of ten years on the Board of a Rural Co-operative Bank (RCB), shall be eligible for reappointment to the same bank only after undergoing a minimum cooling-off period of three years. During this period, the individual cannot be associated with the concerned RCB in any capacity other than as a member or customer, although appointment to the Board of another bank remains permissible, subject to eligibility. Further, for calculating continuous tenure, any period of directorship preceding an interruption of less than three years shall be aggregated, whereas service rendered prior to an interruption of at least three years shall be excluded. The amendment seeks to reinforce the intent of the Banking Regulation Act, 1949 and strengthen governance standards in rural co-operative banks by ensuring periodic board refreshment and preventing prolonged control by the same individuals.