What changed
The Banking Laws (Amendment) Act, 2025 raised the maximum continuous tenure for directors of StCBs and CCBs from eight to ten years, effective August 1, 2025. RBI has now inserted paragraph 7A into the 2025 Governance Directions, effective May 25, 2026, requiring a mandatory three-year cooling-off period after ten years of continuous service before a director can be reappointed to the same board. The cooling-off period also resets the tenure clock: any interruption of less than three years is not counted as a break.
What it means for you
Banks must now enforce a strict three-year gap for directors hitting the ten-year cap, preventing tactics like brief resignations to extend tenure. This strengthens board independence and aligns with the statutory intent of the Banking Regulation Act. Lenders need to update their board appointment and succession policies to track continuous service accurately.
What you must do
- Review current director tenures against the new ten-year continuous limit and identify those nearing the cap.
- Update board appointment policies to include the mandatory three-year cooling-off period after ten years of service.
- Ensure board records track continuous tenure accurately, counting interruptions of less than three years as continuous service.
- Communicate the new rules to all directors and the board nomination committee to ensure compliance from May 25, 2026.
Who it affects
State Co-operative Banks (StCBs), Central Co-operative Banks (CCBs), Directors of StCBs and CCBs, Board nomination committees of rural co-operative banks
Does the cooling-off period apply to directors who have already served eight years before the amendment?
The source does not specify retroactive application; the ten-year continuous tenure limit applies from the effective date of the Banking Laws (Amendment) Act, 2025 (August 1, 2025). Directors who have served eight years before that must calculate their continuous tenure including that period, but the source does not explicitly address whether the cooling-off period applies to pre-existing service.