The Reserve Bank of India has cancelled the licence of one more Co-operative Bank. According to a statement, the central bank has this time cancelled the licence of Sarvodaya Co-operative Bank due to a lack of adequate capital and earning prospects. As a result, the bank will cease to carry on banking business with effect from the close of business on May 12, 2026. The RBI has asked 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.
What does it mean?
This simply means that customers of Sarvodaya Co-operative Bank will no longer be able to withdraw or deposit money in their own bank accounts. Upon the bank's closure, each customer (depositor) will be entitled to a deposit insurance claim of up to Rs 5 lakh on their deposits with the Deposit Insurance and Credit Guarantee Corporation (DICGC).
98.36 per cent of customers will receive the full amount
"As per the data submitted by the bank, as on the date of implementation of the all-inclusive directions, approximately 98.36 per cent of the depositors were entitled to receive the full amount of their deposits from the DICGC," the central bank said. As of March 31, 2026, the DICGC has already paid Rs 26.72 crore out of the total insured deposits.
Citing reasons for cancellation of the licence, the central bank said Sarvodaya Co-operative Bank, with its current financial position, would be unable to pay the full amount to its existing depositors. "Public interest would be adversely affected if the bank is allowed to continue its banking business further," the Reserve Bank said. The Reserve Bank said the bank had failed to comply with several regulatory requirements. Consequent to the cancellation of the licence, Sarvodaya Co-operative Bank has been prohibited from carrying on the business of 'banking', which, inter alia, includes accepting deposits and repaying deposits.
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