The Reserve Bank of India (RBI) has tightened the norms for the re-appointment of directors on urban co-operative banks (UCBs).

For directors serving continuously for 10 years on boards of urban co-operative banks, their re-appointment can happen only after a three-year cooling-off period.

The RBI Monday said there have been instances where directors resorted to circumventing statutory provisions to continue on the boards of the UCBs.

In certain cases, directors resigned briefly from office and got re-elected/co-opted to the board within a short period. They thus continued to be on the board for an extended period beyond the legally permissible tenure.

The Reserve Bank of India (Urban Co-operative Banks - Governance) Amendment Directions, 2026, have come into force with immediate effect.

"A director on the board of a UCB, after completing a continuous tenure of ten 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," the RBI said.

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, it added.

"This, however, shall not preclude him/her from being appointed as a director on the board of another bank, if otherwise eligible," the RBI said.

The RBI has separately issued similar directions to rural co-operative banks (RRBs).