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RBI Cancels Licence of Sarvodaya Co-operative Bank in Mumbai

The Reserve Bank of India has cancelled the licence of Sarvodaya Co-operative Bank Ltd. in Mumbai due to inadequate capital and poor earning prospects. The bank ceased banking operations from May 12, 2026, following the RBI order. The Commissioner for Cooperation in Maharashtra has been asked to wind up the bank and appoint a liquidator. Depositors are entitled to claim up to Rs 5 lakh from DICGC, with 98.36% expected to receive full amounts.

Key Points: RBI Cancels Sarvodaya Co-operative Bank Licence

  • RBI cancels Sarvodaya Co-operative Bank licence
  • Bank lacked adequate capital and earning prospects
  • Bank ceases banking operations from May 12
  • 98.36% depositors entitled to full deposit insurance up to Rs 5 lakh
2 min read

RBI cancels licence of Sarvodaya Co-operative Bank in Mumbai over inadequate capital, financial concerns

RBI cancels licence of Sarvodaya Co-operative Bank in Mumbai over inadequate capital and financial concerns. 98.36% depositors to get full insurance cover.

"The bank does not have adequate capital and earning prospects. - RBI"

Mumbai, May 13

The Reserve Bank of India has cancelled the licence of Sarvodaya Co-operative Bank Ltd., Mumbai, citing inadequate capital, poor earning prospects and concerns over the interests of depositors.

In an official statement, the RBI said the licence was cancelled through an order dated May 12, 2026, under Section 22 read with Section 56 of the Banking Regulation Act, 1949.

Following the cancellation, the bank has ceased to carry on banking business with effect from the close of business on May 12.

The RBI also said that the Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra, has been requested to issue an order for winding up the bank and appointing a liquidator.

According to the central bank, the decision was taken as the bank did not have adequate capital and earning prospects and failed to comply with several provisions of the Banking Regulation Act, 1949.

"The bank does not have adequate capital and earning prospects," the RBI stated.

The RBI further said the bank failed to comply with the requirements under of the Banking Regulation Act.

It also noted that the continuation of the bank would be prejudicial to the interests of depositors.

"The bank with its present financial position would be unable to pay its present depositors in full," the statement said.

The RBI added that allowing the bank to continue banking operations would adversely affect public interest.

Consequent to the cancellation of the licence, Sarvodaya Co-operative Bank has been prohibited from conducting banking business, including acceptance and repayment of deposits, with immediate effect.

The RBI clarified that on liquidation, every depositor would be entitled to receive deposit insurance claim amounts of up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to the provisions of the DICGC Act, 1961.

According to the data submitted by the bank, around 98.36 per cent of depositors were entitled to receive the full amount of their deposits from DICGC as on the date of imposition of All Inclusive Directions.

The RBI also stated that as of March 31, 2026, DICGC had already paid Rs 26.72 crore towards insured deposits under Section 18A of the DICGC Act, 1961, based on the willingness received from depositors of the bank.

The central bank said the action was necessary to protect depositors and safeguard public interest.

- ANI

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Reader Comments

P
Priya S
Cooperative banks in Mumbai have been shaky for years. This is a wake-up call for all of us to check the financial health of our banks regularly. At least 98% of depositors will get full insurance - that's some good news in this mess. But RBI should have intervened earlier!
J
James A
I've seen similar situations in the US with credit unions. The key is that depositors should diversify their savings across multiple insured institutions. With only Rs 5 lakh coverage per bank, putting more than that in one cooperative bank is risky. Hope the liquidator works quickly for the affected people.
V
Vikram M
Bhai, this is exactly why I always tell my relatives to stick with nationalized banks. Cooperative banks sometimes run on trust rather than financial discipline. The RBI should also investigate if there was any mismanagement or fraud. Public interest first! 🇮🇳
S
Sarah B
It's a hard pill to swallow but these actions by RBI protect the larger financial system. The fact that they already paid Rs 26.72 crore in insurance claims shows some process is working. Still, my heart goes out to those senior citizens who must be in panic mode right now. 😞
R
Rohit P
If the bank had such poor financial health, why didn't the RBI act sooner? This is a classic case of regulatory lag. Also, cooperative banks often lack the strict oversight that commercial banks have. Time for a complete audit of all cooperative banks in Maharashtra!

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