Jammu, September 3: The Reserve Bank of India’s decision to place Citizens Co-operative Bank, Jammu, under All-Inclusive Directions (AID) has raised concerns among depositors, borrowers and the local business community, with the regulatory restrictions putting additional pressure on liquidity and day-to-day commercial activity.

The RBI imposed the directions on August 27, 2026, following concerns over the bank’s financial health. Under the restrictions, the bank faces limitations on activities including fresh lending, acceptance of new deposits and major financial commitments without regulatory oversight.
The crisis reflects a combination of longstanding concerns, including weak governance, inadequate loan appraisal, high levels of non-performing assets (NPAs), ineffective recovery mechanisms and shortcomings in risk management. Delayed corrective action and failure to adequately address supervisory concerns had further compounded the situation.
For depositors, the bank’s licence remains active, but withdrawals are subject to the restrictions imposed under the regulatory directions. As per the information provided, depositors can currently withdraw up to ₹1.25 lakh, while eligible deposits are covered by DICGC insurance up to ₹5 lakh per depositor, subject to applicable rules.
Depositors have been advised to submit their willingness forms and preserve important documents, including passbooks and fixed-deposit receipts, for future processing.
At the same time, borrowers remain obligated to service their loans. The regulatory action does not cancel outstanding liabilities, and borrowers are expected to continue paying EMIs to avoid adverse consequences, including possible recovery action.
The impact extends beyond individual account holders. Traders, shopkeepers and micro, small and medium enterprises (MSMEs) in Jammu that depend on the bank for working capital may face difficulties as liquidity constraints affect their ability to meet routine expenses.
Restricted access to funds could make it harder for businesses to pay suppliers, wages, salaries and statutory dues, potentially disrupting otherwise viable enterprises.
The situation calls for a coordinated response involving the RBI, J&K Government, Cooperative Department, bank management, depositors, traders and industrial representatives.
Authorities could explore appropriate liquidity and relief mechanisms to prevent temporary financial stress from turning into wider business failures, while ensuring that any support remains consistent with regulatory and legal requirements.
The immediate priority should be to protect depositors, maintain confidence in the cooperative banking sector and minimise the impact on Jammu’s local economy.
A transparent and time-bound resolution strategy, coupled with stronger governance and risk-management practices, will be essential to restore confidence and safeguard the interests of all stakeholders.