Reserve Bank of India (Urban Co-operative Banks - Governance) Directions, 2025 (Updated as on May 25, 2026)
UR
- Applies toUrban co-operative banks
- StatusIn force
- IssuedNov 28, 2025
- Last amendedMay 25, 2026 · 1 incorporated
- Length62 points in 5 sections · 6 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNov 28, 2025The day this rule starts to apply, as RBI's own text states it.
- Time to get readyNoneIt starts to apply on the day it was published.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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Chapter I. Preliminary
1. Starts at once
The rules start the moment RBI issues them.
2. Who must follow this
These rules apply to every urban co-operative bank.
3. What an urban bank means
An urban co-operative bank is a primary co-operative bank under the banking law.
Chapter II. Constitution of Board and Appointment of Directors
Must know
1. Directors must be honest
Directors should be people who know their work and have high integrity.
2. Two professional directors always
The bank must have at least two professional directors at all times.
3. What professional means here
Banking work at middle or senior level, or a law, accounts or finance qualification.
4. Salary earners banks excused
A salary earners' bank need not keep the two professional directors.
5. Money lenders cannot be directors
A person in money lending, financing or investment work cannot be a director.
6. Convicted persons cannot join
A person convicted of a crime involving moral turpitude cannot be a director.
7. Ten years on the board
A director may sit for ten years at a stretch.
8. Then three years out
After that he must stay away for three years before coming back.
9. Nobody stays for ever
In the gap years he may stay only as a member or a customer.
10. No honorary titles
The bank cannot create honorary posts or titles at board level.
Chapter III. Role of the Board and Individual Directors
Must know
1. The board makes policy
The first job of the board is to make policy.
2. Board watches, boss runs
The board supervises. Day to day running is left to the managing director.
3. Keep customer matters secret
Directors must keep the bank's agenda papers and notes confidential.
4. No orders to staff
Directors must not give instructions to any officer or employee of the bank.
5. No staff postings or promotions
Directors must stay out of appointment, transfer, posting and promotion matters.
6. Do not push loan proposals
Directors must not press the bank to sanction any facility.
7. No bank logo on cards
Directors must not print the bank logo on visiting cards or letterheads.
Do it
8. RBI letters reach the board
The bank must place every RBI circular on policy before its board.
9. Papers before the meeting
Management must give directors full facts and papers well before board meetings.
10. Study the board papers
Directors should read board papers well and ask the managing director for facts.
11. Leave that discussion alone
A director must not join the discussion on a proposal he has interest in.
12. Speak about your interest
A director must tell the managing director and the board well in advance.
Chapter IV. Calendar of Reviews
1. Fraud report every month
Serious irregularities, frauds and misappropriation found in the month go to the board.
2. A quarter of big loans
The board reviews at least 25 per cent of large borrowal accounts every quarter. Large means 5 lakhs and above, or 10 lakhs and above for a scheduled bank.
BankPulse example. A scheduled urban co-operative bank has two hundred borrowal accounts of 10 lakhs and above. Each quarter the board must look at fifty of them, which is 25 per cent. Take four quarters together and every one of the two hundred has been seen once.
Chapter V. Committees of the Board
1. Who sits on it
A chairman and three or four directors. One must know accounts or audit.
2. The board still owns risk
The first responsibility for risk management stays with the board.
3. Risk committee at 5000 crore
A bank whose assets reach 5000 crore must set up a risk committee.
4. Audit committee is compulsory
The bank must set up an audit committee at board level.
5. Note to board each quarter
The audit committee checks how RBI directions are followed and reports quarterly.
Chapter VI. Board of Management
Must know
1. A second board for banking
The bank forms a Board of Management so banking work gets close attention.
2. Small banks may skip it
A bank with deposits below 100 crore may skip the Board of Management.
3. Bigger banks must have it
A bank with 100 crore deposits needs it before it opens new branches.
4. Five to twelve members
The Board of Management has at least five and at most twelve people.
5. What members must know
Each member needs knowledge or practice in fields such as accounts, banking or law.
6. Three years without dealings
A person who did business with the bank in the last three years cannot join.
7. Half from the board only
Not more than 50 per cent of that second board may come from the directors.
8. Chairman cannot hold both
The chairman of the board cannot be chairman of the Board of Management.
9. The chief does not vote
The chief executive sits on that board without a vote and is not counted.
10. RBI can remove a member
RBI may remove a member who fails its criteria or harms depositors.
11. It advises on every loan
It gives expert advice on all loan proposals going to the board.
12. Two thirds must attend
A Board of Management meeting needs two-third of its members present.
Do it
13. Return every December
The bank sends the names on its Board of Management as on December 31. It must reach RBI within 15 days.
14. Ask RBI before removing
The board must get RBI's agreement before it removes such a member.
Background
15. Deposits are not dealings
Keeping a deposit with the bank does not count as a business dealing.
Chapter VII. Appointment of Key Officers
Must know
1. Risk chief at 5000 crore
A bank whose assets reach 5000 crore must appoint a Chief Risk Officer.
2. He reports to the top
The risk chief reports to the chief executive, the board or the risk committee.
3. No business targets
He has no reporting line to business and is given no business targets.
4. No second hat
He cannot also be chief executive, operations head, finance head or audit head.
5. A fixed term
The risk chief is appointed for a fixed term with the board's approval.
Do it
6. RBI approves the chief
Appointing, reappointing or ending the chief executive needs RBI approval first.
7. Apply through PRAVAAH
The application goes to RBI through the PRAVAAH portal.
8. Six months to appoint
A bank crossing 5,000 crore gets six months to appoint the risk chief.
9. Meet him without the boss
The board or the risk committee meets him alone every quarter.
10. He checks credit products
All credit products must be vetted by the risk chief for risk.
Chapter VIII. Repeal and other provisions
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.
How this rule has changed
The points above are the rule as it stands today, after every change listed here.
Issued on Nov 28, 2025. This is the date RBI put the rule out.
Changed on May 25, 2026.
- New paragraph 7A. A new paragraph 7A is added after paragraph 7 in the 2025 governance rules.
- No other roles in UCB. In the three year cooling break, that ex-director can only be a member or customer of that UCB.
- Can join another bank. During cooling break, the person can be director in some other bank, if they meet rules there.
The same subject for other kinds of institution
The same subject for other kinds of institution.
Other RBI rules for urban co-operative banks
RBI capital adequacy rules for urban co-operative banks 2025
RBI compliance officer and compliance function rules for urban co-operative banks
RBI concurrent audit rules for urban co-operative banks 2026
RBI credit bureau reporting rules for urban co-operative banks 2025
RBI credit card and debit card rules for urban co-operative banks 2025
RBI customer service and fair conduct rules for urban co-operative banks 2025
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