In short: The Reserve Bank of India (RBI) has issued Directions to Puducherry Co-operative Urban Bank Ltd. From the close of business on 21 October 2026, depositors can withdraw no more than ₹5,000 from their accounts. The Directions run for six months and are subject to review. The bank's licence has not been cancelled.
What has happened?
By a Directive dated 19 October 2026, the RBI placed restrictions on Puducherry Co-operative Urban Bank Ltd ("the bank"). It used powers under Section 35A read with Section 56 of the Banking Regulation Act, 1949. The restrictions take effect from the close of business on 21 October 2026.
The RBI says it had recently engaged with the bank's Board and senior management to improve its functioning. It says the bank made no concrete effort to address supervisory concerns and to protect depositors' interests. That is why it issued the Directions.
What can the bank no longer do?
Without the RBI's prior written approval, the bank cannot do any of the following, except as the Directions themselves allow:
- grant or renew loans and advances;
- make any investment;
- take on any liability, including borrowing funds or accepting fresh deposits;
- pay out money, whether to meet its obligations or otherwise;
- enter into any compromise or arrangement; or
- sell, transfer or otherwise dispose of its properties or assets.
The bank may still spend on essential items, such as employee salaries, rent and electricity bills, as the Directions specify.
The ₹5,000 withdrawal limit
The bank has been told to allow a depositor to withdraw no more than ₹5,000 in total. This applies to savings accounts, current accounts and any other account the depositor holds. The bank may adjust (set off) a depositor's loan against their deposits, subject to the conditions in the Directions.
Deposit insurance
Eligible depositors can claim insurance from the Deposit Insurance and Credit Guarantee Corporation (DICGC), as the DICGC Act, 1961 provides. The ceiling is ₹5,00,000 for deposits held in the same capacity and the same right. The claim depends on the depositor confirming their willingness and on verification.
| Item | Detail |
|---|---|
| Effective from | Close of business, 21 October 2026 |
| Duration | Six months, subject to review |
| Withdrawal cap | ₹5,000 per depositor |
| Insurance ceiling (DICGC) | ₹5,00,000 |
Is the bank's licence cancelled?
No. The RBI states that issuing the Directions should not by itself be read as cancelling the banking licence. The bank will carry on banking business, within the restrictions, until its financial position improves. The RBI continues to monitor the bank. It may modify the Directions if circumstances require, in the interest of depositors.
What should depositors do?
- Read the RBI Direction dated 19 October 2026. The bank has been told to display it on its website and premises.
- Ask bank officials for details about deposit insurance claims. You can also check the DICGC website, www.dicgc.org.in.
- Keep your account records, since insurance claims depend on verification.
- Watch for any RBI modification to the Directions, since the situation may change.
Frequently asked questions
How much can I withdraw from my account?
Up to ₹5,000 in total, from your savings, current or any other account with the bank, while the Directions are in force.
Will I lose my money above ₹5,00,000?
The sources say only that eligible depositors can claim insurance up to ₹5,00,000 from the DICGC. They say nothing about amounts above that ceiling. Ask the bank or check the DICGC website for details.