The Reserve Bank of India (RBI) has issued regulatory directions to Baghat Urban Co-operative Bank Ltd., Solan, under Section 35A read with Section 56 of the Banking Regulation Act, 1949, citing concerns over the bank’s liquidity and supervisory deficiencies. The directions, issued on October 6, 2025, came into effect from the close of business on October 8, 2025.

Under the new restrictions, the bank cannot, without prior written approval from RBI, grant or renew loans and advances, make investments, incur liabilities, accept fresh deposits, disburse payments, enter into compromises, or sell or transfer its assets, except as specified in the RBI directive. Considering the bank’s liquidity position, depositors are allowed to withdraw up to ?10,000 from their accounts, while the bank may continue to incur expenditures on essential items such as salaries, rent, and electricity. The bank is also permitted to set off loans against deposits as per the conditions outlined in the directive.

The RBI stated that despite prior engagement with the bank’s board and management to improve operations, lack of concrete corrective action necessitated the issuance of these directions to safeguard depositor interests.

Eligible depositors are entitled to claim deposit insurance coverage of up to ?5 lakh through the Deposit Insurance and Credit Guarantee Corporation (DICGC), following verification and submission of willingness. Depositors can contact the bank or visit www.dicgc.org.in

for further details.

The RBI clarified that the directions do not imply cancellation of the bank’s license, and the bank will continue banking operations under the specified restrictions. The directives will remain in force for six months from October 8, 2025, subject to review, and RBI will continue to monitor the situation and take further action as necessary in the interest of depositors.