- The Reserve Bank of India (RBI) has imposed restrictions on Puducherry Co-operative Urban Bank Ltd., limiting withdrawals to ₹5,000 per depositor amid concerns about the bank’s financial position.
- The directions took effect from the close of business on October 21, 2026, and will remain in force for six months, subject to review.
- The restrictions also limit several banking activities, including fresh lending, investments and the acceptance of new deposits, unless the bank obtains prior written approval from the RBI.
RBI Imposes Restrictions on Puducherry Co-operative Urban Bank
- The RBI issued the directions under Sections 35A and 56 of the Banking Regulation Act, 1949.
- According to the central bank, the action followed concerns about the bank’s functioning and the lack of concrete steps to address supervisory issues and protect depositors’ interests.
- The RBI has said it will continue monitoring the bank’s financial position and may modify the directions depending on the circumstances.
₹5,000 Withdrawal Limit: What Customers Should Know
- Under the directions, depositors can withdraw an amount not exceeding ₹5,000 from their savings accounts, current accounts or other accounts, subject to the conditions specified by the RBI.
- Customers should contact the bank directly to understand how the restrictions apply to their individual accounts and transactions.
- The bank may also set off loans against deposits, subject to the conditions in the RBI directions.
Restrictions on Loans, Deposits and Other Banking Activities
Without prior written approval from the RBI, the bank cannot undertake several activities, including:
- Granting or renewing loans and advances.
- Making investments.
- Incurring liabilities, including borrowing funds.
- Accepting fresh deposits.
- Disbursing payments, except as permitted under the directions.
- Entering into specified compromises or arrangements.
- Selling, transferring or disposing of properties and assets, except as allowed under the directions.
The bank may incur certain essential expenses, including employee salaries, rent and electricity bills, as specified in the RBI order.
Eligible Depositors May Receive Insurance Cover of Up to ₹5 Lakh
- Eligible depositors may qualify for deposit insurance of up to ₹5 lakh through the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to applicable rules and verification.
- The insurance limit applies to eligible deposits held in the same capacity and in the same right. Claims are subject to the applicable provisions of the DICGC Act, 1961.
- Depositors must submit their willingness to receive the claim and complete the required verification process. They should contact the bank for instructions and consult the DICGC for further information.
Has the RBI Cancelled the Bank’s Licence?
- No. The RBI has clarified that issuing these directions should not, by itself, be interpreted as cancellation of the bank’s licence.
- Puducherry Co-operative Urban Bank may continue permitted banking activities while the restrictions remain in force.
- The RBI will monitor the situation and may take further action, including modifying the directions, if warranted.
How Long Will the Restrictions Remain in Force?
- The directions came into effect from the close of business on October 21, 2026. They will remain in force for six months, subject to review by the RBI.
- Customers should follow official announcements from the RBI and the bank for any changes to the withdrawal limit or other restrictions.
Key Takeaways for Depositors
- Withdrawal limit: Up to ₹5,000 per depositor, subject to the RBI directions.
- Effective date: October 21, 2026, after the close of business.
- Duration: Six months, subject to review.
- Deposit insurance: Eligible depositors may qualify for coverage up to ₹5 lakh under DICGC rules.
- Bank licence: The RBI has clarified that the directions do not automatically mean the licence has been cancelled.
Conclusion
- The RBI’s restrictions on Puducherry Co-operative Urban Bank Ltd. place limits on customer withdrawals and several banking operations because of concerns about the bank’s financial position and supervisory issues.
- Depositors should stay informed through official RBI and bank communications, confirm how the directions affect their accounts, and seek guidance on the DICGC claim process if they may be eligible.
Source: Reserve Bank of India (RBI), press release dated October 21, 2026.