Thiruvananthapuram: The Reserve Bank is moving towards initiating action to remove those who have been continuously serving as members of the governing bodies of urban banks for more than 10 years. The audit wing has been instructed to identify any such members in all urban cooperative banks across the country who are in violation of the stipulated norms.

If the Reserve Bank proceeds with the removal process, many governing body members of urban banks in Kerala will lose their positions. According to an amendment introduced by the Central Government in the Banking Regulation Act, the maximum permissible term is 10 years. The election of the governing body is carried out as per the laws of the respective states.

As per the law in Kerala, a governing body member can serve two terms of five years each. However, this provision only came into effect after 2024. Those who became members of the governing body before that may continue for another five years. But the Reserve Bank’s position is that such a concession is unnecessary.

Another condition is that individuals without professional qualifications cannot become chairpersons. In Kerala, most of the members are political leaders. They will have to be designated merely as part-time chairpersons without any real authority. The Reserve Bank mandates that the powers related to decisions on loans and similar matters must rest with a Managing Director appointed in accordance with RBI norms.

There are ongoing legal cases against several provisions of the Banking Regulation Act. The Supreme Court has transferred all such cases from across the country to the jurisdiction of the Madras High Court. A final verdict is yet to be given. The implementation of the law has not been stayed. Hence, the Reserve Bank has decided to move forward with further actions.