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RBI Shuts Down Shirpur Bank: Deposits Insured Up to ₹5 Lakh

The Reserve Bank of India has cancelled the banking license of Shirpur Merchants' Co-operative Bank due to its weak financial position and inability to fully repay depositors. The bank must cease all operations by the close of business on April 6, 2026. The RBI has instructed Maharashtra's cooperation authorities to begin winding up the bank and appoint a liquidator. However, the central bank assures that nearly all depositors are protected, with 99.7% expected to receive their full insured amounts up to ₹5 lakh from the deposit insurance scheme.

Key Points: RBI Cancels Shirpur Merchants' Co-operative Bank License

  • License cancelled for inadequate capital
  • Bank ceases operations April 6, 2026
  • DICGC insures deposits up to ₹5 lakh
  • 99.7% of depositors to get full amount
  • Winding up process initiated
2 min read

RBI cancels license of Shirpur Merchants' Co-operative Bank over weak financial position

RBI cancels Shirpur Merchants' Co-operative Bank license over weak finances. Depositors insured for up to ₹5 lakh. Winding up process begins.

"The continuance of the bank will be prejudicial to the interests of its depositors. - Reserve Bank of India"

Mumbai, April 6

The Reserve Bank of India on Monday cancelled the licence of Shirpur Merchants' Co-operative Bank, citing inadequate capital and poor earning prospects, effectively bringing an end to its banking operations.

In a statement, the central bank said the lender will cease all banking activities from the close of business on April 6, 2026.

The RBI added that the bank's current financial position makes it unable to fully repay its depositors and allowing it to continue operations would be detrimental to their interests.

"The Reserve Bank of India has cancelled the licence of The Shirpur Merchants' Co-operative Bank Ltd., Shirpur, under Section 22 read with Section 56 of the Banking Regulation Act, 1949 (BR Act)," the central bank said.

"Consequently, the bank ceases to carry on banking business, with effect from the close of business on April 06, 2026," it added.

Following the cancellation, the RBI has asked the Commissioner for Cooperation and Registrar of Cooperative Societies in Maharashtra to initiate the process of winding up the bank and appoint a liquidator.

The RBI assured depositors that their money remains largely safe under the deposit insurance scheme.

Under the rules of the Deposit Insurance and Credit Guarantee Corporation, each depositor is eligible to receive up to Rs 5 lakh as insurance on their deposits.

According to the data submitted by the bank, around 99.7 per cent of depositors are expected to receive their full eligible amount under this scheme.

The RBI also noted that as of January 31, 2026, DICGC has already paid Rs 48.95 crore to depositors who had submitted their claims.

With the licence now cancelled, the bank is barred from carrying out any banking activities, including accepting deposits or repaying funds, with immediate effect.

"The continuance of the bank will be prejudicial to the interests of its depositors," the central bank stated.

- IANS

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Reader Comments

P
Priya S
Very sad for the local community in Shirpur. These co-operative banks are often the lifeline for small businesses and farmers in tier-2/3 cities. Hope the depositors, especially the elderly, get their claims processed smoothly and without much delay. The RBI assurance is good, but the ground reality of claim settlement can be stressful.
R
Rohit P
Good move by RBI! Stringent action is needed to maintain trust in the banking system. It's a warning to other poorly managed co-op banks. Public's hard-earned money is not a joke. 👍
S
Sarah B
While the regulatory action is necessary, one has to ask where the oversight was earlier. These situations don't develop overnight. Could the RBI and the Registrar of Cooperative Societies have intervened sooner with corrective measures? Prevention is better than cure, especially in finance.
V
Vikram M
₹49 crore already paid out by DICGC! That's a huge amount. Shows how many people were affected. Thank god for deposit insurance. It's a safety net every depositor must be aware of. Always check if your bank is DICGC covered, folks.
K
Karthik V
My chacha had his account in a similar bank in Gujarat. Took him 8 months to get his money after it went bust. The process is slow and frustrating. Hope the authorities have made it more efficient now. The article says 99.7% will get full amount, that's promising.

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