The Reserve Bank of India (RBI) has issued directions to Puducherry Co-operative Urban Bank Ltd, effective from the close of business on October 21, 2026. The bank is barred from granting or renewing loans, making investments, incurring liabilities, accepting fresh deposits, and disbursing payments without prior RBI approval. Withdrawals from depositors' accounts are limited to ₹5,000 per account, reflecting concerns over the bank's liquidity position, according to rbi.org.in.
The RBI's directive, referenced as CHN.DoS.UCBs.No.S336/16-05-847/2026-2027 and dated October 19, 2026, also restricts the bank from selling or transferring assets and entering into compromises or arrangements without RBI consent. The bank is permitted to set off loans against deposits under specified conditions and may only incur expenditure on essential items. The directive has been mandated for public display on the bank's website and premises for transparency, as detailed on rbi.org.in.
These restrictions are imposed under Section 35 A read with Section 56 of the Banking Regulation Act, 1949, highlighting regulatory measures to safeguard depositor interests amid liquidity concerns. Such RBI interventions are part of broader efforts to maintain stability in the cooperative banking sector, which has faced challenges related to asset quality and liquidity in recent years. Similar RBI actions have been taken previously to prevent systemic risks and protect depositors, as noted on rbi.org.in.
The bank's limited withdrawal facility of ₹5,000 per depositor account will remain in place until further notice. The RBI's directive was issued on October 19, 2026, and the restrictions take effect from October 21, 2026, as per the official notification on rbi.org.in.