Puducherry Co-operative Bank Caps Withdrawals at ₹5,000 per depositor after the Reserve Bank of India (RBI) imposed restrictions on the lender over concerns about its financial position.
The directions took effect from the close of business on October 21, 2026, and will remain in force for six months, subject to review.
The move directly affects customers who need access to their savings.
Under the RBI’s directions, depositors cannot withdraw more than ₹5,000 from their savings accounts, current accounts or other accounts with the bank, subject to the conditions specified by the central bank.
Puducherry Co-operative Bank Caps Withdrawals: What Are the Rules?
The RBI has restricted several banking activities at Puducherry Co-operative Urban Bank Limited.
Without prior written approval from the central bank, the bank cannot grant or renew loans and advances, make investments, incur liabilities, accept fresh deposits or sell and transfer its assets, except as permitted under the directions.
The withdrawal limit has been imposed in view of the bank’s present liquidity position.
The RBI said it had previously engaged with the bank’s board and senior management to address concerns about its functioning, but a lack of concrete efforts to resolve supervisory issues led to the restrictions.
The directions have been issued under the Banking Regulation Act, 1949. The RBI will continue monitoring the bank’s position and may modify the restrictions depending on the circumstances and the interests of depositors.
What Happens to Customers’ Deposits?
Customers should be aware that the ₹5,000 limit applies to withdrawals from savings, current and other accounts covered by the directions.
The restrictions do not mean that every depositor can immediately withdraw their entire balance, and customers should contact the bank for guidance on transactions permitted under the RBI’s instructions.
The central bank has also clarified that issuing these directions does not, by itself, mean the bank’s licence has been cancelled.
Puducherry Co-operative Urban Bank can continue banking operations, but only within the limits set by the RBI until its financial position improves or the directions are changed.
The RBI has allowed the bank to set off loans against deposits, subject to the conditions specified in its directions.
Certain essential expenses, including employee salaries, rent and electricity bills, are also permitted under the applicable conditions.
Eligible Depositors Can Claim Insurance Up to ₹5 Lakh
Eligible depositors may be entitled to deposit insurance of up to ₹5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to the applicable rules, verification and submission of the required consent.
This insurance is subject to the monetary ceiling and the depositor’s capacity and right under the scheme; it should not be interpreted as an immediate, automatic payment to every account holder.
Customers seeking information about a potential insurance claim should contact bank officials and check the applicable DICGC requirements.
They should keep their account and deposit records available when seeking clarification about their eligibility.
How Long Will the RBI Restrictions Continue?
The restrictions began at the close of business on October 21, 2026, and are scheduled to remain in force for six months, subject to review.
The RBI has retained the authority to modify its directions as circumstances change and in the interest of depositors.
For customers, the immediate priority is to understand the withdrawal limit, check which transactions are permitted and seek clarification directly from the bank.
The restrictions are a regulatory measure addressing the bank’s financial position, not an announcement that its banking licence has been cancelled.
