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CS Professional · Banking and Insurance - Laws and Practice · Regulatory Framework of Banks

Mr. Raghavan was appointed to the Northern Area Local Board of the Reserve Bank and served one four-year term. He was reappointed and served a second four-year term. The Central Government now proposes a third appointment for him. What is the legal position under the RBI Act, 1934?

He cannot be appointed a third time. A Local Board member holds office for four years and may be reappointed, but not for more than two terms, a maximum of eight years, whether continuously or intermittently. Raghavan has already served eight years, so a gap would not cure the bar.

  1. AHe may be appointed again, as reappointment is unlimited
  2. BHe cannot be appointed again, as no member may be appointed for more than two terms, a maximum of eight years, continuously or intermittentlyCorrect
  3. CHe may be appointed again only after a gap of one year
  4. DHe may be appointed again only for a term of two years

Explanation

Section 9(3) gives a four-year term and permits reappointment, but the proviso bars appointment for more than two terms, i.e. a maximum of eight years, whether continuous or intermittent. Raghavan has completed eight years, so a third term is barred. A gap does not help because the limit applies to intermittent service too.

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