RBI: Big news for bank customers. The Reserve Bank of India (RBI) has placed restrictions on the Puducherry Cooperative Bank due to its declining financial status. Account holders are now limited to withdrawing a maximum of Rs 5,000. These restrictions will be in place for six months starting from October 21, 2026, but will be subject to periodic review.
RBI Takes Major Decision
The RBI mentioned that despite discussions with the bank’s management to enhance its operations, insufficient efforts were made to address regulatory concerns and safeguard depositors’ interests. Consequently, directives were issued under the Banking Regulation Act, 1949, preventing the bank from providing loans, making investments, incurring liabilities, or disposing of assets.
Due to the bank’s liquidity situation, withdrawals from savings, current, or any other accounts are capped at Rs 5,000, although loans can be adjusted against deposits under specific conditions. Customers will face limited withdrawal options as a result of the RBI’s intervention. However, eligible depositors will benefit from deposit insurance up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
In a separate development, the RBI has disclosed the decisions of its Monetary Policy Committee (MPC). The committee unanimously agreed to raise the repo rate by 0.25 percent in response to mounting inflation and price pressures on various commodities. This marks the first repo rate increase in nearly four years, with the rate now standing at 5.50 percent. Governor Sanjay Malhotra indicated a shift to a gradual tightening monetary policy approach.