RBI Told to Act on Gujarat Cooperative Bank Directors Exceeding 10-Year Tenure

Surat | Gujarat —- The Union Ministry of Finance has instructed the Governor of the Reserve Bank of India (RBI) to initiate necessary action in connection with the directors of cooperative banks who have completed 10 consecutive years of their tenure and are yet to resign as per the Banking Laws (amendment) Act 2025. The action was taken following a complaint filed by advocate and farmer leader Darshan Naik to the Finance Minister Nimala Sitharaman for implementing the Banking Laws in the cooperative societies and banks in Surat and South Gujarat. 

Banking Laws (amendment) Act 2025 No 16 by the Law and Justice Department of the Government of India has come into force from August 1, 2025 and includes important provisions to strengthen the banking system, protect the interests of depositors, improve the audit of public sector banks and make cooperative banks more compliant.

As per the law, the time limit of 10 years has been fixed for the tenure of directors in banks operating on a cooperative basis instead of 8 years. Thus, according to the Banking Amendment Act 2025, all directors who have completed 10 consecutive years of their tenure in cooperative banks have been disqualified as directors, so all such directors who have completed 10 years of tenure as directors in cooperative banks were to resign. 

Consequently, such directors were required to resign, and it was the responsibility of the relevant authorities to ensure compliance with this Act in their jurisdictions. They were also tasked with taking necessary actions to secure resignations from directors who have completed 10 years of service in cooperative banks. However, it appears that in Surat district and across Gujarat, the implementation of this Act remains confined to paper.

Furthermore, according to a response provided by the Government in the Rajya Sabha, out of 169 cooperative banks across 16 districts in Gujarat, 145 cooperative banks have failed to implement The Banking Laws (Amendment) Act, 2025, and directors who have completed 10 years of service have not resigned.

Despite repeated representations to the Governor of the Reserve Bank of India and the Registrar of Cooperative Societies, Gujarat, the responsible authorities have shown serious negligence. Despite Naik’s earlier submissions and complaints, there has been a delay and disregard in issuing necessary guidelines, conducting inspections, and taking actions to enforce the provisions of this Act. This has led to increasing chaos in the banking and cooperative sector, particularly in Surat and across Gujarat, where no effective steps have been taken to implement this law, directly impacting the general public.

“This negligence is undermining the objectives of The Banking Laws (Amendment) Act, 2025 and is tantamount to a violation of the law. I have requested to initiate an immediate investigation into this matter and take strict action against the responsible authorities to ensure timely and proper implementation of the law, thereby safeguarding public interest” said Darshan Naik.