The Reserve Bank of India (RBI) has directed a co-operative bank in Dharashiv to immediately remove seven directors from its board for violating the maximum tenure limit of 10 years prescribed under the Banking Regulation Act.
RBI Order and Legal Basis
In an order issued by RBI chief general manager Scenta Joy on May 25, the central bank found the directors in contravention of Section 10A(2A)(i) read with Section 56 of the Banking Regulation Act, 1949. These provisions set limits on the continuous tenure of directors in urban cooperative banks. Dharashiv collector Keerthi Kiran Pujar confirmed to the Times of India that the district deputy registrar had received official communication regarding the removal of the seven directors for breaching tenure norms.
Background of Governance Reforms
The action is part of RBI’s broader effort to strengthen governance standards in urban cooperative banks. Recently, the regulator introduced the Reserve Bank of India (Urban Cooperative Banks — Governance) Amendment Directions, 2026, which mandated a three-year cooling-off period for directors who have completed 10 years of continuous service on a bank’s board.
RBI noted that some directors had attempted to circumvent tenure restrictions by temporarily resigning and then rejoining the board through re-election or co-option, thereby extending their tenure beyond permissible limits. The new rules, effective immediately, are designed to curb such practices.
Legal Framework and Timeline
The central bank also highlighted that the Banking Regulation (Amendment) Act, 2020 introduced an eight-year cap on continuous tenure, effective June 29, 2020. This limit was later revised to 10 years under the Banking Laws (Amendment) Act, 2025, with effect from August 1, 2025.
In its findings specific to the Dharashiv bank, the RBI observed that the seven directors had served on the board for over 10 years. The central bank stated that none of these individuals disputed the fact that they had served continuously beyond the allowed tenure. It further noted that their submissions did not alter the finding of a statutory violation.
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