NewKerala.com

RBI Cancels Sarvodaya Co-op Bank Licence Over Capital Issues

The Reserve Bank of India has cancelled the licence of Sarvodaya Co-operative Bank Ltd., Mumbai, effective May 12, 2026, due to inadequate capital and poor earning prospects. The bank has been ordered to cease all banking operations, including accepting deposits and repaying them. The Commissioner for Cooperation has been requested to appoint a liquidator for the bank. About 98.36% of depositors are entitled to receive their full insured deposits up to Rs 5 lakh from DICGC, which has already paid Rs 26.72 crore.

Key Points: RBI Cancels Sarvodaya Co-operative Bank Licence

  • RBI cancels Sarvodaya Co-operative Bank licence with immediate effect
  • Bank lacks adequate capital and earning prospects
  • 98.36% of depositors eligible for full insurance up to Rs 5 lakh
  • DICGC has paid Rs 26.72 crore in insured deposits
2 min read

RBI cancels licence of Sarvodaya Co-operative Bank

RBI cancels Sarvodaya Co-operative Bank licence immediately due to inadequate capital. 98% of depositors to get full insurance up to Rs 5 lakh.

"Consequently, the bank ceases to carry on banking business, with effect from the close of business on May 12, 2026. - RBI statement"

Mumbai, May 12

The Reserve Bank of India announced on Tuesday that it has cancelled the licence of the Sarvodaya Co-operative Bank Ltd., Mumbai, with immediate effect, as the bank does not have adequate capital and earning prospects.

"Consequently, the bank ceases to carry on banking business, with effect from the close of business on May 12, 2026. The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra, has also been requested to issue an order for winding up the bank and appointing a liquidator for the bank," the RBI said in a statement.

On liquidation, every depositor would be entitled to receive the deposit insurance claim amount of his or her deposits up to a monetary ceiling of Rs 5,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to the provisions of DICGC Act, 196, the RBI statement said.

According to the data submitted by the bank, about 98.36 per cent of the depositors were entitled to receive the full amount of their deposits from DICGC as on date of imposition of all inclusive directions. As on March 31, 2026, the DICGC has already paid Rs 26.72 crore of the total insured deposits under the provisions of the DICGC Act, based on the willingness received from the depositors concerned of the bank.

The RBI said that Sarvodaya Co-operative Bank has failed to comply with the Banking Regulation Act and its continuance is prejudicial to the interests of its depositors.

The bank, with its present financial position, would be unable to pay its present depositors in full; and public interest would be adversely affected if the bank is allowed to carry on its banking business any further, the RBI statement said.

Consequent to the cancellation of its licence, Sarvodaya Co-operative Bank Ltd., Mumbai, is prohibited from conducting the business of banking, which includes, among other things, acceptance of deposits and repayment of deposits with immediate effect, it added.

- IANS

Share this article:

Reader Comments

S
Shreya B
RBI is finally taking action against cooperative banks that don't meet norms. Good to see strict regulation, but the government should also ensure depositors are compensated quickly. The DICGC limit of Rs 5 lakh needs to be increased considering inflation nowadays. 👍
J
James A
Interesting to see the RBI's decisive move here. I'm an NRI and my parents back home have accounts in cooperative banks. This makes me wonder how well-regulated these institutions really are. A wake-up call for everyone to check their bank's financial health.
R
Ravi K
Bahut badiya decision by RBI! These cooperative banks play with hard-earned money of common people. But I have a question: why did they allow this bank to operate when it was already in trouble? The delay has caused unnecessary stress to depositors. 🙏
K
Kavya N
As someone who lost money in PMC Bank fiasco, I feel for these depositors. Yes, DICGC will cover up to Rs 5 lakh, but it takes forever to get the money. The process should be streamlined. Meanwhile, for large depositors, it's a nightmare. 😔
N
Naveen S
Finally, action against errant banks! But the real issue is that small depositors don't check bank ratings or financials. They trust cooperative banks because they seem friendly. The RBI and state cooperative departments need to do better surveillance. Also, why is the DICGC limit stuck at 5 lakh since 2020? Should be at least 10 lakh now.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50