RBI Imposes Section 35A Restrictions on Puducherry Co-operative Urban Bank; Caps Withdrawals at ₹5,000

The Directions took effect from the close of business on October 21, 2026, and will remain in force for an initial duration of six months, subject to ongoing supervisory review by the central bank.

Supervisory Action and Operational Restrictions

The central bank noted that while it had previously engaged with the bank’s Board and Senior Management to address operational vulnerabilities, a lack of concrete corrective efforts necessitated statutory intervention to protect depositor interests:

• Withdrawal Restrictions: The bank has been directed to permit a maximum withdrawal of up to ₹5,000 per depositor across all account categories (savings, current, or term deposits).
• Credit and Deposit Moratorium: Without prior written clearance from the RBI, the cooperative lender cannot sanction, renew, or disburse any loans and advances, make fresh investments, incur liabilities, or accept fresh customer deposits.
• Asset Alienation Barred: The bank is prohibited from transferring, encumbering, or disposing of any immovable or movable assets, with disbursements restricted exclusively to basic operational overheads such as employee payrolls, branch rent, and utilities.
• Loan Set-Off Provision: Depositors are permitted to set off outstanding loan obligations against their deposit balances, subject to regulatory conditions.