RBI Enforces Director Tenure Limits Under Banking Regulation Act

The Reserve Bank of India (RBI) exercised its statutory powers to remove a sitting director from the board of the Latur District Central Cooperative Bank (DCCB). The regulatory action was taken due to an explicit breach of the mandatory 10-year maximum tenure limit prescribed for directors of cooperative banking institutions.

Cooperative banks were historically subject to dual control by state registrars of cooperative societies and the RBI. However, the Parliament passed the Banking Regulation (Amendment) Act 2020, significantly expanding RBI's governance powers over Urban Cooperative Banks (UCBs) and District Central Cooperative Banks (DCCBs) to protect depositor interests.

Under Section 10A and Section 36AAA of the amended Banking Regulation Act 1949, no director of a cooperative bank can hold office continuously for a period exceeding 8 to 10 years. Furthermore, the banking regulator holds explicit authority to supersede bank boards and remove non-compliant management personnel.

This enforcement signals RBI’s zero-tolerance policy toward regulatory non-compliance in urban and rural cooperative credit structures. Candidates preparing for RBI Grade B, Bank PO, and UPSC GS Paper III should study cooperative banking reforms, dual regulation issues, and regulatory powers under the BR Act.