In December 2025, the Reserve Bank of India (RBI) imposed regulatory restrictions on two Urban Cooperative Banks (UCBs) : The Gauhati Cooperative Urban Bank Limited in Assam and The Valsad Mahila Nagrik Sahakari Bank Limited in Gujarat due to their weak financial position, liquidity stress, and unresolved supervisory concerns.
- The restrictions were issued in the form of ‘Directions’ under the Banking Regulation(BR) Act, 1949, and will remain in force for six months, subject to review.
Exam Hints:
- What? RBI imposed Directions on two UCBs
- Legal Basis: Banking Regulation Act, 1949
- Bank 1: The Gauhati Cooperative Urban Bank Ltd (Assam)
- Reason: Liquidity issues and supervisory concerns
- Withdrawal Limit: Rs 35,000 per depositor
- Bank 2: The Valsad Mahila Nagrik Sahakari Bank Ltd (Gujarat)
- Reason: Bank’s weak liquidity position
- Withdrawal Limit: No withdrawals are permitted
- Deposit Insurance: Up to Rs 5 lakh through DICGC
- Duration: Six months (subject to review)
Common Restrictions:
Operational Limits: Banks are prohibited from granting or renewing loans, making investments, incurring liabilities, accepting fresh deposits, disbursing payments, disposing of assets, or entering into compromises without prior RBI approval.
Depositor Protection: Eligible depositors can claim insurance up to Rs. 5 lakh, provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC) under the DICGC Act, 1961.
About Directions on Gauhati Cooperative Urban Bank:
Timeline: Directions effective from the close of business on December 17, 2025.
Withdrawals: Depositors may withdraw up to Rs. 35,000 across all deposit accounts, with the bank permitted to adjust outstanding loans against deposits.
Reason: The RBI imposed the restrictions due to the bank’s weak liquidity position and the absence of effective corrective measures despite prior engagement with the Board and senior management.
About Directions on The Valsad Mahila Nagrik Sahakari Bank Limited:
Timeline: Directions effective from the close of business on December 18, 2025.
Withdrawals: No withdrawals are allowed from any deposit accounts, while the bank may adjust outstanding loans against deposits subject to RBI conditions.
Reason: The restrictions were imposed due to supervisory concerns from recent developments and the bank’s persistent failure to address regulatory issues and protect depositor interests.
About Deposit Insurance and Credit Guarantee Corporation (DICGC):
Overview: A wholly owned subsidiary of the RB, operates under the Ministry of Finance (MoF).
Banks Insured: All commercial banks (including branches of foreign banks), local area banks, regional rural banks, and all state, central, and primary cooperative banks. Primary cooperative societies are not insured.
Deposits Insured: Savings, fixed, current, and recurring deposits.
Exclusions: Deposits of foreign governments, central/state governments, inter-bank deposits, deposits of State Land Development Banks with State cooperative banks, deposits received outside India, and any amount specifically exempted by DICGC with RBI approval.
Chairman – Swaminathan J (Deputy Governor of RBI)
Headquarters – Mumbai, Maharashtra
Established – 1978
