The Reserve Bank of India (RBI) has imposed restrictions on Puducherry Co-operative Urban Bank Ltd, limiting depositor withdrawals to Rs 5,000 per account, citing the bank's current liquidity position.

Effective from the close of business on October 21, 2026, the bank cannot grant or renew loans, make investments, accept fresh deposits, incur liabilities or dispose of assets without prior written approval from the RBI, subject to specified exceptions.

The central bank said the restrictions followed inadequate efforts by the bank's board and senior management to address supervisory concerns and safeguard depositors' interests, despite earlier engagement with the bank.

Eligible depositors may claim deposit insurance of up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to applicable conditions, verification and submission of consent.

The RBI clarified that the directions do not amount to cancellation of the bank's licence. The bank can continue operations subject to the restrictions, which will remain in force for six months from October 21, 2026, and are subject to review.