The Reserve Bank of India has placed Puducherry Co-operative Urban Bank under strict regulatory directions, capping customer withdrawals at Rs 5,000 per account for the next six months. This intervention follows concerns over the bank's liquidity and governance. While the bank remains operational, it is barred from issuing new loans or disposing of assets without prior approval.
The Reserve Bank of India (RBI) has placed Puducherry Co-operative Urban Bank under strict regulatory restrictions effective from October 21, 2026. Under the new directions, customers are limited to withdrawing a maximum of Rs 5,000 from their savings or current accounts. These measures are expected to remain in place for the next six months as the central bank monitors the lender's financial position.
The regulatory action follows sustained communication between the central bank and the bank’s board. According to official disclosures, the RBI had previously raised concerns regarding the institution’s governance and financial stability. The intervention was prompted by the management’s failure to implement required corrective measures or address these supervisory issues, which subsequently triggered a liquidity crisis.
During this six-month period, the bank is prohibited from issuing new loans or advancing any funds. It is also restricted from making new investments or disposing of any assets without the explicit approval of the Reserve Bank of India. While the bank is currently under these restrictions, it is important to note that the RBI has not revoked the bank’s operating license, meaning the institution remains operational for limited banking services.
For depositors, the regulator highlighted the protection offered by the Deposit Insurance and Credit Guarantee Corporation (DICGC). In situations where a bank faces severe financial distress, eligible depositors are protected for claims of up to Rs 5 lakh under the DICGC insurance scheme. The RBI stated that its future course of action will depend entirely on the bank’s ability to stabilize its balance sheet and demonstrate a genuine recovery in its financial health during this oversight period.