Chapter II — Incorporation, Capital, Management and Business

Section 10: Disqualifications of Directors and members of Local Boards

Reviewed by CA Nikhil Gupta · Last reviewed 18 September 2026

Section 10 sets disqualifications for Directors and Local Board members and contains relationship/conflict restrictions.

Operative provisionOfficial sources mappedProvision-specific decode

Finin2min - Section 10 in 2 minutes

Legal effectSection 10 sets disqualifications for Directors and Local Board members and contains relationship/conflict restrictions.

Operative ruleThe disqualifications include specified government, insolvency, mental-capacity, bank-employment and banking-company/co-operative-bank directorship situations, subject to statutory exceptions for specified RBI office-holders.

Connected lawSub-section (2) also prevents certain closely connected persons, such as partners or specified principal-agent relationships, from simultaneously serving in the prohibited combination.

File evidenceAppointment due diligence should test every statutory disqualification and the express exceptions before nomination or continuation in office.

Statutory structure and clause / subsection decode

This map separates the operative limbs of this provision so thresholds, powers, conditions and exceptions are not collapsed into a single summary.

Scope

Section 10 sets disqualifications for Directors and Local Board members and contains relationship/conflict restrictions.

Operative limb

The disqualifications include specified government, insolvency, mental-capacity, bank-employment and banking-company/co-operative-bank directorship situations, subject to statutory exceptions for specified RBI office-holders.

Legal boundary

Sub-section (2) also prevents certain closely connected persons, such as partners or specified principal-agent relationships, from simultaneously serving in the prohibited combination.

Worked practical example

Facts. A candidate who is a director of a banking company cannot be assessed only under a general conflict policy; the statutory disqualification and any applicable exception must be checked first.

Compliance points and common mistakes

Do not decide the issue from the heading alone. Map the facts to the operative words of Section 10 and to each relevant subsection, clause, proviso or explanation shown above.
Keep the statutory question separate from the operational overlay. Sub-section (2) also prevents certain closely connected persons, such as partners or specified principal-agent relationships, from simultaneously serving in the prohibited combination.
Do not convert an exception, exemption or discretionary RBI/Government power into an automatic entitlement. Record the authority, conditions and effective date.
Where the provision is historical, omitted or repealed, state that status prominently and do not present it as a current compliance obligation.

Connected provisions and instruments

Section 10 has no universal instrument dependency in this package. Add an RBI circular or direction only when its subject, entity and effective date cover the issue being analysed.

Questions and answers

What is the purpose of Section 10?

Disqualifications of Directors and members of Local Boards: Section 10 sets disqualifications for Directors and Local Board members and contains relationship/conflict restrictions.

Which statutory limb should be checked first?

Scope - Section 10 sets disqualifications for Directors and Local Board members and contains relationship/conflict restrictions.

What is the next legal boundary?

Operative limb - The disqualifications include specified government, insolvency, mental-capacity, bank-employment and banking-company/co-operative-bank directorship situations, subject to statutory exceptions for specified RBI office-holders.

What record should support the conclusion?

Section 10 file evidence: Appointment due diligence should test every statutory disqualification and the express exceptions before nomination or continuation in office.

Primary sources

Source control for Section 10: use the official consolidated RBI Act for the statutory text and footnotes, then separately reconcile any post-Finance Act 2022 amendment, commencement notification or RBI instrument relevant to the event date.