Only Rs 5,000 can be withdrawn; find out which bank the RBI has taken action against.

This RBI action is a significant blow to the bank's customers, as they can no longer withdraw more than Rs 5,000 from their accounts for the next six months. Furthermore, the bank is prohibited from granting loans or making investments without prior authorization.

The central bank has clarified that this move does not amount to the cancellation of the bank's banking license. The bank will continue its operations under these restrictions until its financial position improves. Depending on the circumstances, the RBI may review or modify these directives.

On October 21, 2026, the Reserve Bank of India (RBI) imposed strict operational restrictions on the Puducherry Co-operative Urban Bank Limited. These directives, issued by the RBI to protect the interests of depositors and in light of the bank's liquidity position, will remain in effect for the next six months. During this period, depositors will be permitted to withdraw up to Rs 5,000 from their accounts, subject to certain conditions.

Other restrictions imposed on the bank

In view of the restrictions imposed by the RBI, the Puducherry Co-operative Urban Bank Limited cannot grant any new loans or advances, nor can it renew existing loans, without prior written approval from the Reserve Bank.

Additionally, the bank is prohibited from making new investments, incurring new liabilities, raising funds through borrowing, accepting new deposits, making payments, or selling or transferring any of its assets, unless specific conditions outlined in the directives are met. Given the bank's current liquidity position, the RBI has allowed depositors to withdraw up to Rs 5,000 from their savings, current, or other accounts. However, there is no need to panic, as the RBI has clarified that these measures do not mean the bank's license has been cancelled. The bank will continue its operations under these restrictions until its financial situation improves.

What is the RBI's objective?

When a bank is on the verge of collapse, the RBI intervenes under the Banking Regulation Act, 1949. The objective is to protect the interests of ordinary depositors and prevent the bank from defaulting entirely.

Puducherry Co-operative Urban Bank Limited is currently facing a severe financial crisis and is experiencing a significant shortage of liquidity. In response, the RBI has imposed limits on cash withdrawals by customers to prevent the bank from collapsing completely. The bank now has a period of six months to improve its financial position.

How safe is your money?

If the bank's financial situation does not improve and it fails, customers will be entitled to insurance coverage for their deposits of up to ₹5 lakh, under the rules of the Deposit Insurance and Credit Guarantee Corporation (DICGC). This coverage of up to ₹5 lakh includes both the principal amount and the accrued interest.