Urban Co-operative Banks have long wrestled with governance rot. Directors hitting statutory tenure limits would execute a well-worn maneuver: resign quietly, wait a few months, then get re-elected or co-opted back onto the board, effectively resetting their 10-year clock and staying entrenched indefinitely.
The RBI has now shut down this workaround. Under amendments effective this week, a UCB director is capped at 10 continuous years. Once they step down, they face a mandatory, non-negotiable 3-year cooling-off period before they can return to the board in any capacity.
The enforcement mechanism is strict. If a director tries the quick-resignation trick—stepping down for less than 3 years and seeking re-election—the RBI will not recognize the gap. Their original 10-year clock keeps running, making the maneuver pointless.
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