RBI imposes restrictions on CCBL Jammu; deposit withdrawals capped at Rs 1.25 lakh

Salaries, routine expenditures allowed

Nishikant Khajuria

JAMMU, Aug 28: The Reserve Bank of India (RBI) has imposed restrictions on the operations of the Citizens' Co-operative Bank Limited, Jammu, citing public interest and the need to protect the interests of depositors

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The bank has been barred from making investments, incurring liabilities, accepting fresh deposits, disbursing payments, entering into arrangements for selling, transferring or otherwise disposing of any of its assets, while an amount not exceeding Rs 1.25 lakh will be allowed to be withdrawn by a depositor.

The restrictions, issued under Section 35A read with Section 56 of the Banking Regulation Act, 1949, came into effect from the close of business on August 27, 2026 and will remain in force for six months, subject to review by the RBI.

Pertinent to mention that CCBL Jammu was already functioning under SAF-III strictures since 2012 and now some more restrictions on the transactions have been added by the RBI in the interest of the depositors.

According to the RBI directive, dated August 25, 2026, the central bank stated that it had been satisfied that intervention was necessary in the public interest. Under the directions, the bank has been barred, without prior written approval of the RBI, from granting or renewing loans and advances, making investments, incurring liabilities including borrowing of funds, accepting fresh deposits, disbursing or agreeing to disburse payments, entering into compromises or arrangements, or selling, transferring or otherwise disposing of any of its properties or assets, except to the extent specifically permitted under the directive.

One of the most significant provisions of the RBI directions relates to deposit withdrawals. The bank has been permitted to allow each depositor to withdraw an amount not exceeding Rs 1,25,000 from savings, current, recurring, term deposit or any other deposit account.

However, in cases where a depositor also has a liability towards the bank, either as a borrower or surety, the amount permitted to be withdrawn may be adjusted against the relevant borrowing account. The RBI has also permitted the bank to renew existing term deposits upon maturity in the same name and in the same capacity.

Despite the restrictions, the bank has been permitted to incur expenditure necessary for essential day-to-day functioning. This includes payment of employees' salaries, rent, rates and taxes, electricity bills, printing, stationery and postage.

It can also meet legal expenses such as stamp duty, registration charges, arbitration fees and other prescribed legal costs, besides court fees in compliance with court orders or statutory provisions. Payment of lawyers' fees has been permitted up to Rs 5,000 in each case.

The bank may also pay the premium payable to the Deposit Insurance and Credit Guarantee Corporation (DICGC) in accordance with applicable law.

For other day-to-day administrative expenditure, the RBI has prescribed a ceiling linked to the bank's average monthly expenditure on the concerned item during the six months preceding the directive. Where no such expenditure had been incurred earlier, the amount should not exceed Rs 5,000.

The directions further permit investment in Government/SLR-approved securities and acceptance of contributions towards capital from existing members, subject to RBI oversight. Payments relating to gratuity and provident fund benefits to retiring employees have also been permitted, while leave encashment and superannuation benefits to retiring or retired employees can be made with RBI approval.

The RBI has directed the bank to furnish to the Deposit Insurance and Credit Guarantee Corporation (DICGC), within 45 days of the effective date of the directions, a list showing the outstanding deposits of each depositor, duly certified as correct by the Chief Executive Officer.

The RBI has also allowed the bank to set off loans against deposits in cases where the loan agreement provides for such adjustment. However, several conditions have been prescribed, including that the accounts must be KYC-compliant at the time of adjustment. However, deposits belonging to third parties, including guarantors or sureties, cannot be adjusted against loans. The bank has been directed to provide due notice to depositors before exercising such an option.

The RBI has asked the bank to prominently display advisory notices at its branches, offices and extension counters to guide customers regarding grievance redressal. Such notices are to include information on the maximum deposit insurance cover available through DICGC and the maximum amount a depositor can withdraw under the RBI directions at a given point of time.

The restrictions will remain in force for six months, unless modified or withdrawn earlier, and will be subject to review by the Reserve Bank of India.