Section 10 of The National Bank for Agriculture and Rural Development Act, 1981
- (1)If a director--
- (a)becomes subject to any of the disqualifications mentioned in section 9; or
- (b)is absent without leave of the Board for more than three consecutive meetings thereof, his seat shall thereupon become vacant.
- (2)Any director may resign his office by giving notice thereof in writing to the Central Government, and on his resignation being accepted by the Central Government or if his resignation is not sooner accepted, on the expiry of three months from the receipt thereof by the Central Government, he shall be deemed to have vacated his office.
Summary
- A director immediately loses their seat if they become subject to any of the disqualifications (like becoming insolvent or being declared of unsound mind).
- A director loses their seat if they miss more than three Board meetings in a row without getting permission to be absent.
- A director can resign by sending a written notice to the Central Government.
- A resignation becomes official when the Central Government accepts it.
- If the government ignores the resignation letter, the director is automatically freed from the role three months after the government receives the notice.
Practical examples
FAQ
1. What happens if a director goes bankrupt while serving on the Board?
Their seat immediately becomes vacant because bankruptcy (insolvency) is a disqualification.
2. How many meetings can a director skip before they lose their job?
A director loses their seat if they are absent for more than three consecutive meetings without the Board's permission. Skipping up to three is risky, but the rule triggers when it is more than three.
3. Who does a director submit their resignation to?
They must give their written resignation notice to the Central Government, not to the Chairman or the Reserve Bank.
Test yourself
Q1.Under Section 10 of The National Bank for Agriculture and Rural Development Act, 1981, how many consecutive Board meetings must a director be absent from, without leave, to trigger an automatic vacancy of their seat?
Q2.Under Section 10 of The National Bank for Agriculture and Rural Development Act, 1981, read with Section 9, what happens if a serving director is convicted of an offense that the Central Government decides involves moral turpitude?
Q3.Under Section 10 of The National Bank for Agriculture and Rural Development Act, 1981, to whom must a director submit their written notice of resignation?
Q4.Under Section 10 of The National Bank for Agriculture and Rural Development Act, 1981, if the Central Government does not formally accept a director's resignation letter, when does the director legally vacate their office?