The Reserve Bank of India (RBI) announced regulatory restrictions on Puducherry Co-operative Urban Bank Ltd under Section 35A read with Section 56 of the Banking Regulation Act, 1949. The underlying directive, CHN.DoS.UCBs.No.S336/16-05-847/2026-2027, is dated 19 October 2026. RBI publicly announced the directions on 21 October 2026, and the restrictions apply from the close of business on that date.
Without prior written approval from RBI, the bank cannot grant or renew loans or advances, make investments, incur liabilities including acceptance of fresh deposits or borrowing, disburse payments, enter into compromises or arrangements, or dispose of property or assets, except as permitted under the directions. Certain essential expenditure, including salaries, rent and electricity, may be incurred as specified in the directions.
Given the bank's liquidity position, RBI has capped withdrawals at ₹5,000 per depositor from savings, current or other accounts. Set-off of loans against deposits is permitted subject to the directive's conditions. The ₹5,000 limit is a withdrawal restriction; it is not the deposit-insurance ceiling.
Eligible depositors may receive deposit-insurance claims up to ₹5,00,000 in the same capacity and same right from the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to submission of willingness, verification and applicable statutory provisions. Customers and businesses holding deposits with the affected bank should review their immediate liquidity requirements and contact the bank regarding the applicable procedure.
RBI expressly clarified that these restrictions do not amount to cancellation of the bank's banking licence. The directions remain in force for six months from the close of business on 21 October 2026, subject to RBI review and possible modification. This is an operative supervisory action concerning the named co-operative bank, not a general restriction on other banks.