Restricted holiday is one type of holiday in India and it is also called optional holiday.
India is a big country and there are many festivals which vary from state to state, religion to religion, and community to community. It is almost impossible to have all these festivals as holidays for employees.
In general, a company or organization may list many restricted holidays, but the employee is only allowed to select a limited number of days from the list for their own restricted holidays in a year. Many companies allow employees select 2 restricted days.
Restricted holidays are paid holidays, and the business will run as normal. Please note that restricted holidays are different from gazetted holidays, which are declared by the government and mandatory holidays.