RBI imposes restrictions on Puducherry Co-op Urban Bank, caps withdrawals
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The Reserve Bank of India imposed restrictions on Puducherry Co-operative Urban Bank due to financial instability. Customers are limited to withdrawals of Rs 5,000 over the next six months. The bank's recent lack of compliance with supervisory concerns prompted these regulatory actions. Eligible depositors can claim up to Rs 5 lakh through the Deposit Insurance and Credit Guarantee Corporation.
Mumbai, The Reserve Bank on Wednesday imposed several restrictions on Puducherry Co-operative Urban Bank, including capping of withdrawals by a customer at Rs 5,000, in view of the deteriorating financial position of the lender.The restrictions will remain in force for six months from the close of business on Wednesday (October 21, 2026) and are subject to review, the Reserve Bank of India (RBI) said in a statement. Eligible depositors would be entitled to receive a deposit insurance claim amount of up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
In the recent past, the central bank has engaged with the Board and Senior Management of Puducherry Co-operative Urban Bank for improvement in its functioning, RBI while issuing 'Directions' under relevant sections of the Banking Regulation Act, 1949.
"However, lack of concrete efforts taken by the bank to address the supervisory concerns and protection of the interest of depositors of the bank have necessitated issuance of these Directions," it said.
As per the Directions, restrictions have been imposed on granting loans and advances, making investment, incurring liability, and transferring or otherwise disposing of properties or assets.
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"Considering the bank's present liquidity position, the bank has been directed to permit withdrawal of an amount not exceeding Rs 5,000 from savings bank or current accounts or any other account of a depositor but is allowed to set off loans against deposits subject to the conditions...," RBI said.
It further said the issuance of the Directions should not per se be construed as cancellation of the banking licence by RBI.
The bank will continue to undertake banking business subject to restrictions specified in the Directions till its financial position improves, it said.
The RBI further said it continues to monitor the position of the bank and will take necessary actions, including modifications of the Directions, as warranted, depending upon circumstances and in the interest of the depositors.
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Figures reflect the source report and its stated period. This article is for information and is not investment advice.
