Reserve Bank of India (Urban 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 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.

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.

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.

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.

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.

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.

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.

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.

15. Deposits are not dealings

Keeping a deposit with the bank does not count as a business dealing.

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.

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.

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.