RBI Cancels Licence of Mumbai-Based Co-operative Bank

RBI Cancels Licence of Sarvodaya Co-operative Bank Due to Insufficient Capital and Earning Prospects

The Reserve Bank of India (RBI) has taken a crucial decision to cancel the licence of city-based Sarvodaya Co-operative Bank, citing a lack of adequate capital and earning prospects. The bank will cease to carry on banking business with effect from the close of business on May 12, 2026, as per a statement released by the RBI.

As a consequence of the licence cancellation, the RBI has requested the Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra, to issue an order for the winding up of the bank and to appoint a liquidator. In the event of liquidation, every depositor will be entitled to receive the deposit insurance claim amount of his/her deposits up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

According to the RBI, about 98.36 per cent of the depositors were entitled to receive the full amount of their deposits from DICGC as on the date of imposition of All Inclusive Directions. Notably, as of March 31, 2026, DICGC has already paid Rs 26.72 crore of the total insured deposits.

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The RBI stated that Sarvodaya Co-operative Bank, with its present financial position, would be unable to pay its current depositors in full. The central bank added that public interest would be adversely affected if the bank is allowed to carry on its banking business any further, as the lender has failed to comply with several regulatory requirements.

As a result of the licence cancellation, Sarvodaya Co-operative Bank has been prohibited from conducting the business of banking, including the acceptance of deposits and repayment of deposits.