The Reserve Bank of India has released new rules for cooling-off period for directors of co-operative banks.
Why new rules have been released?
The directors of co-operative banks have been found using certain methods to bypass the provisions of the Act. In some cases, directors resign from their positions for a short period and then get re-elected or re-appointed to the Board soon afterwards.
This allows them to continue serving on the Board of a UCB for a period longer than the legally permitted tenure, which goes against the intent and spirit of the law.
What are the new rules?
A director of a Urban co-operative bank or Rural co-operative bank, who has completed 10 continuous years on the Board can be appointed again to the Board of the same bank only after a cooling-off period of at least 3 years.
The re-appointment may be through election, co-option, or any other method. During these 3 years, the person cannot be connected with the bank in any role except as a normal member or customer.
However, the person can still become a director in another bank if eligible.
While calculating the continuous 10-year tenure, any previous period served on the Board will also be counted if the break between two terms is less than 3 years. But if the break is 3 years or more, the earlier period of service will not be counted.
Click here to download RBI rules for Urban Co-operative Bank
Click here to download RBI rules for Rural Co-operative Bank
You Can Also Check: Loan EMI Calculator | Latest Banking Jobs | Financial Calculators – FD, SIP, Gold Loan, etc.
