The Reserve Bank of India has imposed operational restrictions on Nagar Sahakari Bank Ltd. under the Banking Regulation Act due to supervisory concerns and deterioration in the bank’s functioning.

As per the RBI directions effective from the close of business on May 18, 2026, the bank cannot grant or renew loans, make investments, accept fresh deposits, incur liabilities, or dispose of assets without prior approval from the central bank.

The RBI has also capped withdrawals for depositors at ?10,000 per account, subject to specified conditions. However, the bank has been permitted to meet essential operational expenses such as employee salaries, rent and electricity bills.

The central bank said the action was taken to safeguard depositor interests after the bank failed to adequately address regulatory concerns despite ongoing engagement with its board and senior management.

Eligible depositors will continue to be covered under deposit insurance of up to ?5 lakh through the Deposit Insurance and Credit Guarantee Corporation in accordance with applicable rules.

The RBI clarified that the directions do not amount to cancellation of the bank’s licence and will remain in force for six months, subject to review.