Reserve Bank of India (Rural Co-operative Banks - Governance) Directions, 2025 (Updated as on May 25, 2026)

1. Starts at once

The rules start the moment RBI issues them.

2. Who must follow this

These rules apply to every rural co-operative bank.

3. Which banks those are

State co-operative banks and central co-operative banks, as the NABARD law defines them.

1. Directors must be honest

Directors should be people who know their work and have high integrity.

2. They must work as one

Directors must work together and lead the bank smoothly.

3. Non members cannot join

A person who cannot even be a member cannot be a director.

4. Money lenders cannot be directors

A person in money lending, financing or investment work cannot be a director.

5. Convicted persons cannot join

A person convicted of a crime involving moral turpitude cannot be a director.

6. Ten years on the board

A director may sit for ten years at a stretch.

7. Then three years out

After that he must stay away for three years before coming back.

8. Nobody stays for ever

In the gap years he may stay only as a member or a customer.

9. How ten years count

A break of less than three years does not wipe the earlier time.

BankPulse example. A director joins in 2012 and serves eight years, to 2020. He is off the board for two years and returns in 2022. Two years is less than three, so the first eight still count. He may serve two more years and no longer. Had he stayed away four years, the clock would have started again at zero.

10. Two directors who know banking

The bank must have at least two directors with banking experience.

11. Or the right qualification

Accounts, banking, agriculture and development, law or audit all count.

12. Another bank is allowed

The gap does not stop him joining the board of a different bank.

1. The board makes policy

The board is responsible for making the bank's policies.

2. Board watches, boss runs

The board supervises. Day to day running is left to the chief executive.

3. The bank holds public money

The bank is a trustee and keeper of the public's money.

4. Keep up with technology

Directors should know the latest banking technology and push the bank to use it.

5. Stay out of daily work

Directors must not step into management work or everyday business.

6. No orders to staff

Directors must not send instructions to any officer or employee.

7. Do not push loans

Directors must not approach or influence anyone to sanction a facility.

8. No pushing for a job

Directors must not sponsor anyone for a job, a promotion or a transfer.

9. No favour to that party

A related party must get no preferential treatment of any kind.

10. Keep customer matters secret

A director is under oath of secrecy and must reveal nothing about a customer.

11. Do not call for files

Directors must not call department papers, files or notes for their own scrutiny.

12. No bank logo on cards

Directors must not print the bank's design on visiting cards or letterheads.

13. Circulars reach every director

Every RBI and NABARD circular on policy must be seen by every director.

14. A written code of conduct

The bank must write a code of conduct for its directors and senior staff.

15. Signed before two bodies

Directors sign the code in witness of the Registrar and NABARD.

16. Attend and take part

Directors should come to board meetings regularly and take part properly.

17. Get the papers early

Directors should get agenda notes in advance and check their quality.

18. Strengthen audit and vigilance

Directors should build up internal audit and vigilance, and follow up on it.

19. Read the inspection reports

Directors should read audit and NABARD inspection reports and act in time.

20. Review the frauds

Directors should review frauds, their reporting and the action taken.

21. Watch the weak branches

Directors should review how branches are doing, loss-making ones above all.

22. Big loans reach the board

Loans sanctioned by the chief executive or general manager must reach the board.

23. Chase the recovery

Directors should build follow up so bad loans and overdues come down.

24. A plan every year

Directors should see a development action plan made and checked each quarter.

25. Leave that discussion alone

A director must not join a board talk on a proposal he has interest in.

26. Speak about your interest

He must tell the chief executive and the board well in advance.

27. If a relative deal happens

The director must disclose the whole nature of it to the proper authority.

28. Board papers go back

Board papers should normally be returned to the bank after the meeting.

29. Who counts as senior staff

General managers and heads of function count as senior management.

1. A return each quarter

The bank sends a return to its NABARD regional office every quarter.

2. Due by the tenth

It is due by the 10th of April, July, October and January.

1. Audit committee for all

Every one of these banks must set up an audit committee at board level.

2. Three or four directors only

The audit committee is three or four directors, one of them its chairman.

3. Chairman and boss stay out

The bank's chairman and its chief executive cannot sit on the audit committee.

4. It can ask anyone anything

The audit committee gets direct and open access to management and both audits.

5. Risk committee for all

Every one of these banks must form a risk committee under its board.

6. Who sits on it

The chief executive and the heads of credit, investment and operational risk.

7. The technology head is invited

The head of the IT department attends as a special invitee.

8. An accountant is brought in

One qualified chartered accountant from the area must be co-opted.

9. The audit committee meets quarterly

The audit committee must meet at least once in every quarter.

10. It meets the auditors alone

Twice a year it meets management and the auditors in separate private sittings.

11. A loan review system

The risk committee must see a loan review system that keeps checking loan quality.

12. A cash policy that works

It must see a liquidity policy with funding plans, other scenarios and limits.

13. Split the duties

It must set up controls that split duties and fix clear reporting lines.

14. The main risks are named

Credit, liquidity, interest rate, market, foreign exchange and solvency risk.

1. Old rules stand repealed

All earlier governance rules for these banks are repealed.

2. Old actions still stand

Anything done under the old rules stays governed by those old rules.

3. Old approvals still count

Approvals given under the repealed rules now come under these rules.

4. Other laws still apply

These rules add to other laws. They do not cut them down.

5. RBI's reading is final

If a rule is unclear, RBI's reading of it binds everyone.