The restrictions take effect from the close of business on October 21, 2026, and will remain in force for six months, subject to review. Eligible depositors may claim deposit insurance of up to ₹5 lakh under applicable rules.
BKK Bureau, New Delhi | 21 October 2026 | 9:27 PM IST
The Reserve Bank of India has imposed statutory restrictions on Puducherry Co-operative Urban Bank Ltd under Section 35A read with Section 56 of the Banking Regulation Act, 1949. The directions were issued on October 19, 2026, and take effect from the close of business on October 21.
Under the RBI order, the bank cannot, without prior written approval from the central bank, grant or renew loans and advances, make investments, incur liabilities including borrowing funds or accepting fresh deposits, or make payments except as permitted under the directive. The bank has also been restricted from entering into compromises or arrangements and from selling, transferring or disposing of its properties or assets, subject to exceptions specified in the RBI’s directions.
Depositors will be permitted to withdraw no more than ₹5,000 from savings, current or other accounts. The bank may set off loans against deposits, subject to the conditions laid down in the RBI order. It may also spend on certain essential items, including employee salaries, rent and electricity bills, as permitted by the directions.
The RBI said it had engaged with the bank’s board and senior management in the recent past to seek improvements in its functioning. According to the regulator, the bank’s lack of concrete efforts to address supervisory concerns and protect depositors’ interests led to the issuance of the directions.
Eligible depositors may receive deposit insurance claims of up to ₹5 lakh for deposits held in the same capacity and in the same right. Claims will be handled by the Deposit Insurance and Credit Guarantee Corporation under the applicable provisions of the DICGC Act, 1961, after depositors submit their willingness and the required verification is completed.
The RBI clarified that the directions do not by themselves amount to cancellation of the bank’s licence. Puducherry Co-operative Urban Bank will continue its banking business subject to the specified restrictions until its financial position improves. The RBI said it will continue monitoring the bank and may modify the directions or take other action depending on circumstances and in the interest of depositors.
The directions will remain effective for six months from the close of business on October 21, 2026, and are subject to review. Depositors have been advised to contact bank officials for information on the applicable process, while details of deposit insurance are also available through the DICGC.
Key restrictions
- Withdrawals limited to ₹5,000 from eligible deposit accounts.
- No fresh deposits, loans, investments or borrowings without prior RBI approval.
- Payments and asset transfers restricted except as permitted by the RBI directive.
- Eligible depositors can seek DICGC insurance cover up to ₹5 lakh, subject to applicable rules and verification.
Why it matters
The RBI action directly limits the bank’s ability to conduct several core banking activities and restricts depositor withdrawals. The order also sets out the available deposit insurance framework and confirms that the bank’s licence has not been cancelled.
Source: Reserve Bank of India
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