RBI Caps Withdrawals at Rs 5,000 at Puducherry Co-operative Urban Bank for Six Months

The Reserve Bank of India has placed Puducherry Co-operative Urban Bank Ltd under Directions from the close of business on October 21, capping withdrawals at Rs 5,000 per depositor in total for six months, subject to review. The central bank said the bank had made no concrete effort to address supervisory concerns despite recent engagement with its board, and barred it from granting or renewing loans, making investments, accepting fresh deposits or selling assets without prior written approval. The licence has not been cancelled, and eligible depositors remain covered by DICGC insurance up to Rs 5 lakh.

Awaaz Punjab Investigations Desk21 October 20263 min readRead in all 3 languages

The Reserve Bank of India (RBI) has issued Directions to Puducherry Co-operative Urban Bank Ltd under Section 35A read with Section 56 of the Banking Regulation Act, 1949, by a directive dated October 19, 2026, effective from the close of business on October 21, according to the RBI release summarised by Law of the Land.

Source: Law of the Land (RBI release)

Under the Directions, a depositor may withdraw no more than Rs 5,000 in total across savings, current or any other accounts held with the bank. The Directions run for six months and are subject to review. The bank may set off a depositor's loan against deposits, subject to the conditions in the Directions, Whalesbook reported in its account of the same RBI action.

Source: Whalesbook

Rs 5,000maximum total withdrawal per depositor (yaani five thousand rupees only)

6 monthsduration of the Directions, subject to review

Rs 5 lakhDICGC deposit insurance ceiling per depositor (yaani Rs 500,000)

21 Octdate the restrictions took effect, from close of business

Without the RBI's prior written approval, the bank cannot grant or renew loans and advances, make any investment, take on any liability including borrowing funds or accepting fresh deposits, disburse payments, enter into any compromise or arrangement, or sell, transfer or dispose of its properties or assets. It may still spend on essential items such as employee salaries, rent and electricity bills, as specified in the Directions.

The RBI said it had recently engaged with the bank's board and senior management to improve its functioning, but the bank made no concrete effort to address supervisory concerns and to protect depositors' interests, which is why the Directions were issued.

The central bank clarified that issuing the Directions should not by itself be read as cancelling the bank's licence. The bank will carry on banking business within the restrictions until its financial position improves, and the RBI may modify the Directions if circumstances require. Eligible depositors can claim insurance from the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to Rs 5,00,000 for deposits held in the same capacity and right, subject to willingness confirmation and verification.

Sources: Reserve Bank of India release via Law of the Land, Whalesbook.