The Reserve Bank of India (RBI) has issued directions to Urban Co-operative Bank Ltd., Dehradun, under Section 35A read with Section 56 of the Banking Regulation Act, 1949 (as applicable to co-operative societies), citing supervisory concerns arising from recent material developments at the bank.

As per the directive dated February 9, 2026, the restrictions came into effect from the close of business on February 10, 2026. Under the directions, the bank is prohibited, without prior written approval from the RBI, from granting or renewing loans and advances, making investments, incurring liabilities including borrowings, accepting fresh deposits, disbursing payments, entering into compromises or arrangements, or selling and transferring assets, except as specifically permitted in the RBI’s notification.

In view of the bank’s current liquidity position, it has also been directed not to allow withdrawals from savings, current, or any other deposit accounts. However, the bank may set off loans against deposits subject to prescribed conditions. It is permitted to incur expenditure on essential items such as employee salaries, rent, and electricity bills, as outlined in the directions.

The RBI stated that the action has been taken to safeguard the interests of depositors. Eligible depositors will be entitled to receive deposit insurance coverage up to ?5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC), in accordance with the provisions of the DICGC Act, 1961, upon submission of willingness and verification of claims.

The central bank clarified that the issuance of these directions should not be construed as cancellation of the bank’s licence. The bank will continue to conduct banking operations subject to the imposed restrictions until its financial position improves. The directions will remain in force for six months from February 10, 2026, and are subject to review.