Puducherry Co-operative Urban Bank: RBI Caps Withdrawals at ₹5,000 for Six Months; DICGC Cover Up to ₹5 Lakh

₹5,000. From the close of business on Wednesday, 21 October 2026, that is the most a depositor of Puducherry Co-operative Urban Bank Ltd can withdraw from all their accounts put together. RBI announced the curbs in a press release today, issuing directions under Section 35A of the Banking Regulation Act for six months, until 21 April 2027, subject to review. Deposits up to ₹5 lakh are covered by DICGC insurance.

Puducherry Co-operative Urban Bank: what RBI has ordered

RBI’s directive, dated 19 October and effective from the close of business on 21 October, says that without RBI’s prior written approval the bank cannot:

• grant or renew any loans and advances;
• make any investment;
• incur any liability, including borrowing or accepting fresh deposits;
• make or agree to make any payment, whether to settle liabilities or otherwise;
• enter into any compromise or arrangement, or sell, transfer or dispose of its property.

The bank may spend on essential items such as staff salaries, rent and electricity bills, as specified in the directions.

The ₹5,000 limit explained

RBI’s words: “the bank has been directed to permit withdrawal of an amount not exceeding ₹5,000/- … from savings bank or current accounts or any other account of a depositor.” The key point is that the limit is per depositor, across all their accounts, not per account. Someone with a savings account and an FD cannot take ₹5,000 from each.

The table is our illustration. Any amount you withdraw now would generally reduce the balance considered for an insurance claim. Depositors may also set off loans against deposits, subject to the conditions in RBI’s directions.

Why RBI acted

RBI says it “has in the recent past engaged with the Board and Senior Management of the bank for improvement in its functioning. However, lack of concrete efforts taken by the bank to address the supervisory concerns and protection of the interest of depositors of the bank have necessitated issuance of these Directions.” It cites the bank’s “present liquidity position” as the reason for the withdrawal cap.

RBI also says the directions are not a cancellation of the banking licence. The bank continues to do business with restrictions until its finances improve, and RBI may modify the directions depending on circumstances.

DICGC insurance: how to claim

Eligible depositors can receive a deposit insurance claim of up to ₹5,00,000 “in the same capacity and in the same right” from DICGC, the RBI-owned deposit insurer, on submitting a willingness declaration, after verification. In simple terms:

1. Contact the bank’s branch and ask for the DICGC willingness/claim form.
2. Submit it with KYC documents and proof of your deposits (passbook, FD receipts).
3. The bank compiles claims and sends them to DICGC, which pays eligible amounts to an account you nominate in another bank.

“Same capacity and same right” means deposits held in the same way are added together. Your individual savings account and individual FD count as one; a joint account with a spouse counts separately. Our DICGC deposit insurance guide explains the rules with examples.

What depositors should do now

• Do not panic-queue. The ₹5,000 limit applies however early you go. Use it for urgent needs.
• Collect your documents. Passbook, FD receipts, KYC proofs, and a statement of all accounts. Update outdated KYC; see our re-KYC guide.
• Open or keep an account at another bank to receive any DICGC payout and salary or pension credits. Ask your employer or pension office to change the credit account.
• Cancel auto-debits linked to this account, or move them to another bank, since payments out are restricted. Our e-mandate guide shows how.
• Deceased depositors: nominees or legal heirs can claim; see our nominee vs legal heir guide.
• Beware of agents who offer to speed up claims for a fee. DICGC claims are free.

Questions to ask at the branch

1. What is my total balance across all accounts, including accrued FD interest?
2. Has the ₹5,000 been withdrawn already by any joint holder, and how is it counted?
3. When will the bank send DICGC claim lists, and what is my claim reference?
4. Can my loan with the bank be set off against my deposits, and on what terms?
5. Where is a copy of RBI’s directions displayed? RBI has told the bank to show it on its website or premises.

Ask for answers in writing where possible, and keep copies.

Cheques and EMIs

Cheques you have issued from this bank may bounce, because the bank cannot make payments beyond the limit. Tell people you have given cheques to, and pay them another way. If you have a loan from this bank, check with the branch how EMIs will be handled; set-off against deposits may be possible under RBI’s conditions.

A pattern in urban co-operative banks

RBI uses Section 35A directions on a few urban co-operative banks each year when their finances deteriorate. Outcomes vary: some recover or merge with stronger banks, others eventually lose their licence. The directions often get extended; RBI on 19 October extended curbs on another Maharashtra co-operative bank for a further three months, more than two years after they were first imposed.

For savers, the lesson is to keep deposits at any one bank within the ₹5 lakh insured limit per capacity, especially at smaller banks offering higher FD rates.

FAQs

How much can I withdraw from Puducherry Co-operative Urban Bank?

Up to ₹5,000 in total across all your accounts, from 21 October 2026, under RBI’s directions.

How long will the restrictions last?

Six months from the close of business on 21 October 2026, subject to review.

Is my money insured?

Yes, up to ₹5 lakh per depositor in the same capacity and right, through DICGC, on a willingness declaration.

Has the bank’s licence been cancelled?

No. RBI says the directions are not a cancellation of the licence.

Takeaway: RBI has capped withdrawals at Puducherry Co-operative Urban Bank at ₹5,000 per depositor for six months. Claim DICGC insurance of up to ₹5 lakh, move salary and auto-debits to another bank, and keep records of every interaction.