On October 19, 2026, the RBI issued directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949, restricting operations of Puducherry Co-operative Urban Bank Ltd effective October 21. The bank is prohibited from making or receiving payments above prescribed limits, signaling regulatory intervention due to financial instability.
RBI Imposes Restrictions on Puducherry Co-operative Urban Bank
The Reserve Bank of India (RBI), exercising powers under Section 35A read with Section 56 of the Banking Regulation Act, 1949, issued binding directions dated October 19, 2026, to Puducherry Co-operative Urban Bank Ltd. The directive, effective from the close of business on October 21, 2026, imposes significant operational restrictions on the bank, including limits on withdrawals and repayments by depositors.
Such measures are typically invoked when a co-operative bank exhibits signs of financial distress, poor governance, or non-compliance with prudential norms. While the full text of the directive is not yet public, similar past actions indicate potential capital adequacy issues or asset quality deterioration.
For legal practitioners advising financial institutions, this underscores the enforcement role of the RBI under Section 35A—a provision enabling prompt corrective action. Institutions, especially urban co-operative banks, must ensure robust compliance frameworks to avoid regulatory censure. The public is advised that insured deposits remain protected up to ₹5 lakh under DICGC norms.
Citations
- Banking Regulation Act, 1949, Sections 35A, 56
