RBI Extends Operational Curbs on Dehradun and Pusad Urban Cooperative Banks by Three Months — November 6, 2026
The Reserve Bank of India (RBI) has extended operational directions on two regional urban cooperative banks (UCBs)—Urban Co-operative Bank Ltd., Dehradun (Uttarakhand), and The Pusad Urban Co-operative Bank Ltd., Pusad (Maharashtra)—for an additional three months.
The regulatory restrictions, issued under Section 35A read with Section 56 of the Banking Regulation Act, 1949, have been continued in the public interest to safeguard the interests of depositors while the central bank monitors the financial position and restructuring efforts of both lenders.
Details of the Extensions
In separate notifications, the central bank confirmed the updated timelines for both cooperative institutions:
- The Pusad Urban Co-operative Bank Ltd.: The regulatory directions, which were originally brought into force on November 6, 2025, and previously extended through November 7, 2026, will now remain effective until the close of business on February 7, 2027, subject to review.
- Urban Co-operative Bank Ltd., Dehradun: The curbs, first enacted on February 10, 2026, following directive orders issued on February 9, 2026, have been extended from the close of business on November 10, 2026, for a further three-month period through February 10, 2027.
The RBI clarified that the continuation or modification of these directions should not be construed as a cancellation of their banking licences or an indication that the regulator is satisfied with their financial position. Both entities continue to operate under heightened regulatory oversight.
Nature of Curbs and Depositor Implications
Under the Section 35A directions, both cooperative banks remain barred from undertaking key banking activities without prior written clearance from the RBI:
- They cannot grant or renew any loans or advances, make fresh investments, or incur new liabilities, including borrowing funds or accepting fresh deposits.
- They are restricted from disbursing payments, entering into compromises or arrangements, or disposing of bank properties and assets.
- Essential day-to-day administrative expenditures, such as employee salaries, rent, and utility bills, remain permitted subject to regulatory limits.
Withdrawal rules remain heavily restricted. In Dehradun, account holders have faced a complete bar on withdrawals from savings and current accounts following internal and forensic findings that flagged historical accounting anomalies dating back to 2013–14. In the case of Pusad Urban Co-operative Bank, customer withdrawals were previously capped at ₹5,000 across savings, current, and other deposit accounts following severe liquidity strain.
For eligible depositors of both banks, safety nets under the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961, remain accessible, providing insurance cover on deposits up to a monetary ceiling of ₹5,00,000 per depositor, subject to verification and regulatory guidelines.
Sector-Wide Context for Indian Investors
The extension of directions highlights the RBI's ongoing enforcement drive across India's Tier-1 and Tier-2 cooperative banking space. Over recent fiscal periods, the central bank has stepped up audits, invoking the Supervisory Action Framework (SAF) and Section 35A curbs to ring-fence balance-sheet distress before it affects broader financial stability.
For retail savers and small businesses in regional hubs, the persistent restrictions serve as a reminder of credit and counterparty risks inherent in weakly capitalised cooperative lenders, cementing the need for prudent allocation across better-capitalised commercial scheduled banks.
