The RBI has restricted withdrawals and barred new lending at Puducherry Co-operative Urban Bank for six months, citing worsening financial conditions and unresolved supervisory concerns.
The Reserve Bank of India has imposed sweeping restrictions on Puducherry Co-operative Urban Bank, limiting customer withdrawals to Rs 5,000 as it moves to contain risks from the lender’s worsening financial condition. The central bank said the measures were necessary after repeated engagement with the board and senior management failed to produce concrete steps to address supervisory concerns and safeguard depositors.
According to the RBI, the directions will stay in force for six months from the close of business on Wednesday, 21 October 2026, and may be reviewed earlier if circumstances change. The bank will be unable to grant or renew loans, make investments, incur liabilities, or transfer or dispose of assets without approval under the order.
The central bank said eligible depositors will be entitled to claim up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation. It also stressed that the restrictions should not be interpreted as a cancellation of the bank’s licence, and that Puducherry Co-operative Urban Bank may continue basic banking operations within the limits set out in the directions.
The RBI said it will keep the situation under close watch and may alter the measures if the lender’s position improves. The move reflects the regulator’s continuing focus on protecting depositors when co-operative banks show signs of stress, particularly where liquidity pressures and weak compliance raise concerns about the safety of funds.
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