Three-year cooling-off period for UCB Directors may set in motion a game of musical chairs

Experts say a three‑year cooling‑off is insufficient to stop board‑level manipulation in urban cooperative banks
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The rule requiring at least three years off the board after a director serves ten consecutive years on an urban cooperative bank could trigger a round‑robin of appointments.

Banking specialists note that directors barred from staying on the board after the ten‑year limit may install their own allies, have them step down after three years (even though their term is five years), and then reclaim their seats.

Experts argue the cooling‑off should be five years and that directors should be barred from joining another bank’s board during that interval to stop the loophole.

Eligibility Norms

According to the Reserve Bank of India (Urban Co-operative Banks‑Governance) Amendment Directions, 2026, a director on the Board of a UCB, after completing a continuous tenure of ten years in office, will 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.

During the cooling‑off period, the said director will not be associated with the UCB in any capacity/manner other than as a member/customer. This, however, will not preclude him/her from being appointed as a director on the Board of another bank, if otherwise eligible.

Manipulation Fears

Co-operative banking expert D Krishna said the three-year cooling-off period will definitely not stop manipulation.

“Two banks in a town can have unwritten swap arrangements for persons completing the 10-year stipulation. Bank hopping should have been prohibited in the RBI directions.

“A cooling period of a full term of five years would have been a much neater arrangement, which would avoid the practice of filling mid-term vacancies either by election or by nomination and the attendant manipulations,” Krishna said.

As of March-end 2025, there were 1,457 UCBs across the country. They collectively had deposits and advances aggregating ₹5,84,415 crore and ₹3,70,225 crore, respectively.

Published on May 27, 2026