RBI caps withdrawals at ₹5,000 from Puducherry Co-operative Urban Bank

The Reserve Bank of India has imposed restrictions on the banking operations of Puducherry Co-operative Urban Bank Limited, capping withdrawals at ₹5,000 for depositors from savings, current, recurring deposit, term deposit and other accounts.

In its directive, the RBI said the restrictions were necessary to protect the interests of depositors and for securing proper management of the bank. The bank has been prevented from granting or renewing any loans or advances, making any investments, incurring any liability, including borrowing funds, and accepting fresh deposits without the prior approval of the RBI, according to a government source.

The RBI has directed the bank to prominently display advisory notices at all its branches and extension counters to guide customers on grievance redressal. The notices must specifically include the maximum amount of insurance cover provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC) for customers’ deposits and the maximum amount a depositor is permitted to withdraw at a given point in time under the directions. The bank has also been told to open help desks for grievance redressal.

The DICGC, a wholly owned subsidiary of the RBI, provides insurance cover for deposits in commercial banks, regional rural banks and co-operative banks up to ₹5 lakh per depositor per bank. The advisory notices are intended to make customers aware of this cover and the withdrawal limit in force.

A government source said the financial position of the bank is “not good, though it is not alarming.” The RBI intervened to arrest any further slide in its position, the source said, adding that the bank has huge outstanding loans to be recovered. The regulatory body has concerns about its financial position and hence imposed certain caps on its operations to protect the interests of depositors, the source said.

The restrictions are part of the RBI’s supervisory powers over co-operative banks. Such directions can include limits on withdrawals, lending and acceptance of deposits when the regulator finds weaknesses in a bank’s financial position or governance. The measures are meant to prevent further deterioration while protecting depositors.

For depositors, the immediate effect is that they can withdraw only up to ₹5,000 from their accounts. The bank cannot accept fresh deposits without the RBI’s prior approval, and it cannot lend or invest without approval. These steps are aimed at keeping the bank’s liabilities from growing while the regulator reviews its position.

Co-operative banks are subject to RBI regulation, and the regulator can issue directions to protect depositors when it finds financial or governance concerns. The DICGC cover of ₹5 lakh per depositor per bank is separate from the withdrawal limit and applies to insured deposits. Customers should check the advisory notices at their branch for details on the withdrawal cap and grievance redressal.

Customers of Puducherry Co-operative Urban Bank Limited can continue to operate their accounts within the ₹5,000 withdrawal limit. Depositors seeking information or redressal can approach the bank’s branches, where the advisory notices are to be displayed, or use the help desks set up for the purpose. The RBI has asked the bank to ensure that customers are informed about the DICGC insurance cover and the withdrawal cap applicable at any given time.