Banking Regulation Act, 1949 · Section guide
Section 16: Prohibition of common directors
Reviewed by CA Nikhil Gupta · Last reviewed 18 September 2026
Section 16 — Prohibition of common directors. Restricts common directorships and concentrated connected-company influence; the 2025 amendment adds the specified central-co-operative-bank director exception for election to the relevant State co-operative bank board.
Official statute linkedProvision-specific anatomyPractical case + evidence file2025 amendment mapped
Effective-date control — 1 August 2025. Specified co-operative-bank common-director exception added. For an event that straddles this date, the working paper should show the pre/post amendment position rather than treating the current wording as historically universal.
Statutory structure and provision map
This map is a provision-specific explanation, not a substitute for the exact statutory text.
Core statutory rule
Restricts common directorships and concentrated connected-company influence.
Condition / limitation
the 2025 amendment adds the specified central-co-operative-bank director exception for election to the relevant State co-operative bank board.
Source and effective-date control
Apply the wording of Section 16 that was in force on the event date; use the official Act and any applicable commencement/amending instrument linked on this page.
Professional application
Explain common-director restrictions, exemptions and the 2025 cooperative-board change; distinguish the bank categories.
Evidence / working-paper checklist
- Section 16 evidence: board and committee composition register.
- Section 16 evidence: fit-and-proper / experience / conflict declarations.
- Section 16 evidence: appointment, removal or RBI approval correspondence.
- Section 16 evidence: minutes recording abstention, approval and effective dates.
Retain the event date and source version with the file so the conclusion remains reproducible after later amendments.
Common mistakes to avoid
- For Section 16, avoid counting titles instead of checking statutory experience/independence conditions.
- For Section 16, avoid implementing an appointment before a required RBI approval takes effect.
- For Section 16, avoid failing to record conflicts, abstentions or tenure calculations.
Linked Rules, RBI directions, notifications and forms
Linked instruments keep their own legal basis; they are not attributed to Section 16 unless the official instrument says so.
Related sections inside the Act
Use these links to read Section 16 in its statutory sequence, especially where the provision imports definitions, approvals, appeals, penalties or winding-up consequences from neighbouring sections.
Current-law source control
Source control: read Section 16 in the DFS/India Code text together with the mapped 2025 amending Act and commencement date.
Dated matters: verify any later Gazette, RBI direction or binding judgment affecting Section 16 on the event date.
Primary official sources
Disclaimer
This Finin2min page is an educational and professional reference. Banking regulation is fact-, entity- and date-sensitive. Verify the current Act, Gazette amendments and commencement notifications, applicable RBI Rules/directions and the transaction record before acting or filing.