The Reserve Bank of India (RBI) has tightened rules for UCB directors re-appointment to improve governance in Urban Co-operative Banks. The RBI said some directors stayed on boards for long periods by resigning briefly and returning soon after.
Under the new RBI rules for UCB directors re-appointment, a person cannot serve continuously as a director for more than 10 years. After completing the tenure, the individual must observe a compulsory three-year cooling-off period before returning to the board.
The central bank introduced the amendment to stop misuse of existing rules and strengthen transparency in co-operative banks. The updated guidelines came into effect immediately.
The RBI believes the move will improve accountability and ensure better management practices in Urban Co-operative Banks across the country. Banking experts say the decision could help strengthen public trust in the co-operative banking sector.
