The Reserve Bank of India (RBI) has continued its actions against co-operative banks, and in this series, it has now cancelled the licence of Shirpur Merchants Co-operative Bank. The central bank took this step as Shirpur Merchants Co-operative Bank does not have adequate capital and earning prospects. The RBI said in a statement on Monday that, as a result of the licence cancellation, Shirpur Merchants Co-operative Bank will cease operations with effect from the close of business on April 6, 2026. The Commissioner for Cooperation, Registrar of Cooperative Societies, Maharashtra, has been requested to issue an order for the winding up of the bank and appoint a liquidator.
What happens to the money of customers?
Upon liquidation, every customer with money in each bank will be entitled to receive the deposit insurance amount of up to Rs 5,00,000 on his/her deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC). The Reserve Bank of India said that, as per the co-operative bank data, about 99.7 per cent of the depositors are entitled to receive the full amount of their deposits from the Deposit Insurance and Credit Guarantee Corporation. The DICGC has already paid out Rs 48.95 crore of the total insured deposits as of January 31, 2026, based on the consent of the respective depositors.
Why has the RBI cancelled the bank's licence?
Giving details of the licence cancellation, the RBI said that Shirpur Merchants Co-operative Bank does not have adequate capital and profit prospects, and, due to its current financial position, it will be unable to make full payments to its existing customers.
"The bank's continued operations will be detrimental to the interests of its customers," the central bank said. Consequent to the cancellation of the licence, Shirpur Merchants Co-operative Bank has been prohibited from carrying on banking business, including the acceptance and payment of deposits, with immediate effect.
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