RBI restricts Puducherry Co-operative Urban Bank, caps withdrawals at Rs 5,000
RBI has placed business restrictions on Puducherry Co-operative Urban Bank Ltd from 21 October 2026 and capped depositor withdrawals at Rs 5,000, citing the bank's liquidity position.
The Reserve Bank of India (RBI) has issued Directions to Puducherry Co-operative Urban Bank Ltd that restrict its business from the close of business on 21 October 2026. Depositors can withdraw no more than Rs 5,000 from their savings, current or other accounts, RBI said, citing the bank's present liquidity position. The Directions will remain in force for six months and are subject to review.
What Happened
RBI issued the Directions on 19 October 2026 under Section 35A read with Section 56 of the Banking Regulation Act, 1949. These powers let RBI direct how a bank conducts its business.
Without RBI's prior written approval, the bank cannot grant or renew loans and advances, make investments, borrow funds or accept fresh deposits. It also cannot make payments to discharge its liabilities, enter into a compromise or arrangement, or sell or transfer its properties and assets, except as allowed in the Directions. The bank may pay for essential items such as staff salaries, rent and electricity bills. It may also set off loans against deposits, subject to conditions in the Directions.
RBI said it had recently engaged with the bank's Board and senior management to improve the bank's functioning. According to RBI, a lack of concrete efforts by the bank to address supervisory concerns, along with the need to protect depositors, made the Directions necessary.
What It Means
For depositors, the main change is the Rs 5,000 withdrawal limit across their accounts. Customers who have both a loan and a deposit with the bank may be able to set one off against the other, subject to the conditions RBI has laid down.
Eligible depositors are entitled to a deposit insurance claim of up to Rs 5 lakh, in the same capacity and right, from the Deposit Insurance and Credit Guarantee Corporation (DICGC), the RBI arm that insures bank deposits. This depends on depositors submitting their willingness and on verification. Depositors may contact bank officials or visit www.dicgc.org.in for details.
RBI said the Directions are not a cancellation of the bank's licence. The bank will continue banking business under the restrictions until its financial position improves, and RBI may modify the Directions depending on circumstances. A copy of the Directions is to be displayed on the bank's website and premises. Depositors with complaints can approach RBI at https://cms.rbi.org.in.
Source: RBI press release
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Sources & Citations
- RBI press release — Reserve Bank of India