The Reserve Bank of India (RBI) has imposed restrictions on the Puducherry Cooperative Bank following concerns about its financial condition. Under the new directions, account holders can withdraw a maximum of ₹5,000 from their accounts. The restrictions came into effect on October 21, 2026, and will remain in place for six months, subject to periodic review by the central bank.
The move is intended to address concerns surrounding the bank’s financial position and protect depositors’ interests. Customers may face difficulties accessing their money during the restriction period, as withdrawals and several banking activities will be subject to RBI directions.
Why Has the RBI Imposed Restrictions?
According to the RBI, discussions were held with the bank’s management to improve its functioning. However, the central bank said that adequate steps had not been taken to address regulatory concerns and protect depositors.
Consequently, the RBI issued directions under the Banking Regulation Act, 1949. These restrictions prevent the bank from issuing loans, making investments, taking on liabilities or disposing of its assets, subject to the terms of the directions.
The intervention reflects the central bank’s concerns about the bank’s financial and liquidity position.
Withdrawal Limit Set at ₹5,000
Under the RBI’s directions, customers can withdraw up to ₹5,000 from their savings accounts, current accounts or other eligible accounts, subject to the applicable restrictions.
The directions also allow loans to be adjusted against deposits under specified conditions. However, customers will have limited access to their funds while the restrictions remain in force.
The measures are scheduled to continue for six months from October 21, 2026, although the RBI may review the situation periodically.
Deposit Insurance Cover of Up to ₹5 Lakh
Despite the restrictions, eligible depositors may receive insurance protection through the Deposit Insurance and Credit Guarantee Corporation (DICGC), which provides cover of up to ₹5 lakh, subject to the applicable rules and conditions.
The insurance facility is designed to protect eligible deposits in circumstances covered by the DICGC framework. Customers should check their eligibility and the applicable claim process before relying on the coverage.
RBI Repo Rate Increased to 5.50%
In a separate development, the RBI’s Monetary Policy Committee (MPC) unanimously decided to raise the repo rate by 0.25 percentage points, taking it to 5.50%.
The increase came amid rising inflation concerns and price pressures affecting various commodities. It marked the first repo rate hike in nearly four years.
RBI Governor Sanjay Malhotra indicated that monetary policy was moving towards a gradual tightening approach. The rate decision is separate from the restrictions imposed on the Puducherry Cooperative Bank.
Disclaimer: This article is intended for general informational purposes only and is based on the details provided. Banking restrictions, deposit insurance eligibility and regulatory decisions are subject to official RBI and DICGC directions. Account holders should contact their bank or consult official notifications for information relevant to their accounts.