Document title: Directions under Section 35A read with Section 56 – The Citizens Co-operative Bank Ltd., Jammu
Issuing authority: Reserve Bank of India
Reference number: Directive Ref. No. पयर्.िव.ज�ू. सं.S132/12-01-040/2026-27
Date: August 27, 2026
Banking and Credit
RBI has exercised powers under Section 35A read with Section 56 of the Banking Regulation Act, 1949, issuing directions to The Citizens Co-operative Bank Ltd., Jammu. Effective close of business on August 27, 2026, the bank is prohibited from granting or renewing any loans and advances, making any investment, incurring any liability including borrowing funds, accepting fresh deposits, disbursing payments, entering into compromises or arrangements, and selling or disposing of assets, unless specifically authorized in the RBI direction dated August 25, 2026. The bank may, however, incur expenditures for essential items such as employee salaries, rent, electricity bills, as specified.
Liquidity
Considering the bank’s present liquidity position, RBI has permitted withdrawals up to ₹1,25,000 per depositor from savings, current, or any other accounts. The bank may also allow set‑off of loans against deposits subject to the conditions in the direction. Essential operational expenditures are allowed.
Financial Stability and Inclusion
Depositors are entitled to claim deposit insurance coverage up to ₹5,00,000 per depositor from the Deposit Insurance and Credit Guarantee Corporation (DICGC) under the DICGC Act, 1961, upon submission of willingness and verification. RBI clarifies that the issuance of the directions does not constitute cancellation of the banking licence; the bank will continue to operate under the imposed restrictions until its financial position improves. RBI will monitor the bank and may modify or lift the directions based on circumstances.
Regulatory and Policy Measures
The directions are issued under the authority of Section 35A read with Section 56 of the Banking Regulation Act, 1949, and will remain in force for six months from August 27, 2026, subject to review. RBI has previously engaged with the bank’s board and senior management but found insufficient remedial action, prompting the current restrictions. The press release reference is 2026-2027/978, signed by Chief General Manager Brij Raj.
In summary, RBI has imposed a six‑month operational restriction on The Citizens Co-operative Bank Ltd., Jammu, limiting its lending, deposit‑taking, and liability‑incurring activities while allowing essential expenditures and limited withdrawals, with deposit insurance protection for depositors and ongoing supervisory oversight.