Pramod Karnad: The cooperative banks were brought at par with commercial banks, and the Section 56 AACS that was for cooperative institutions, no longer holds any importance
FinTech BizNews Service
Mumbai, 4 January 2026: Maharashtra Urban Cooperative Banks Federation, convened a special general body meeting of the Federation, in Pune on Saturday 3rd January to deliberate and decide upon action plan with regard to the criteria of ten-year tenure of the board members and the eligibility set for the directors of the UCBs, with the objective of seeking justice on the matter.
Pramod Karnad, Chairman of the Board of Management at Sharad Sahakari Bank, Nashik, touched upon legal challenges for cooperative banks under recent RBI regulations at the said SGBM. The operative portion of his insightful speech is as follows:
“I will briefly touch upon on some important points. Earlier, SB Adsul Saheb, (Director, Brihan Mumbai UCB Association), mentioned some points, veteran Raghavendra Rao Saheb, (Vice Chairman, NAFCUB) also mentioned some points, and one common thread among them was the law point. Shri Suresh Shah Saheb, (Kurduwadi Janata UCB, Solapur) gave an emotional challenge at the beginning, but more than the emotional challenge, I definitely feel that the law point is more essential because the legal battle is more important. In September 2020, when this BR Act was amended in Section 10A and Section 10B, we should have actually become alert then. Earlier, one speaker, I think from the Municipal Bank, rightly raised the point that cooperative banks were brought at par with commercial banks, and let me tell you, the Section 56 AACS that was for cooperative institutions, no longer holds any importance. AACS happened in 1966 under Section 56 of the Cooperative Act, but cooperative institutions also became banking companies now, and because of that, whatever privileged position was bestowed on cooperative banking, in 2020 amendments, got diminished—meaning their privileged position as banks was lost; cooperative banks became banking companies, and thus all these acts apply to us.
Qualifications, audits
Many commitments came, but most importantly, tenure came, and educational qualifications for 51% of directors came into play. Now, while some petitions were ongoing, I am specifically coming to the law point, Sir, that clarity came with these two rules brought for the 2020 amendment of the Banking Regulation Act—one rule in March, and now the recent 10 December 2025 rule specifically regarding ineligible directors.
This will be a very big issue in court, and therefore, while fighting in the Supreme Court as well, we will need to hire big learned senior counsels who are constitutional experts. The reason is that if you see, this amendment—is it retrospective or prospective? as someone mentioned earlier—the biggest thing is that no law is retrospective; it is always prospective. This too is prospective, sir; this law, this rule too is prospective.
Key Discussion Points
Regulatory Changes focus on 2020 Banking Regulation Act amendments, equating cooperatives with commercial banks, losing privileges, and new rules on director tenure (10 years max, counting prior service prospectively).
Ineligible Directors Rule
New RBI rules from March and 10 Dec 2025 target ineligible directors; applies upon board reconstitution (e.g., elections or post-RBI supersession), not immediately, as per my interpretation.
Legal Strategy
I emphasize constitutional legal fights over emotional protests, needing expert counsels.
RBI inspection reports now flag ineligible directors and demand action within 60 days.
My advice is the banks not having upcoming elections need not worry immediately; prioritize legal action via Supreme Court petitions.”
