- The Reserve Bank of India (RBI) has cancelled the banking licence of Sarvodaya Co-operative Bank due to inadequate capital and poor earning prospects. The decision came into effect from the close of business on May 12, 2026.
- According to the RBI, the bank did not have sufficient capital and lacked viable earning potential to continue operations safely.
- The central bank also noted that the bank failed to comply with several regulatory requirements.
- Following the cancellation of the licence, Sarvodaya Co-operative Bank has been barred from carrying out banking operations. This includes:
- Accepting deposits from customers
- Repaying deposits
- Conducting any regular banking business
- The RBI has also directed the Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra, to initiate the process of winding up the bank and appoint a liquidator.
Relief for Depositors
Depositors of the bank will receive deposit insurance coverage from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Under the deposit insurance scheme:
- Each depositor is eligible to receive up to ₹5 lakh
- Around 98.36% of depositors are expected to get the full amount of their deposits
- As of March 31, 2026, DICGC had already paid ₹26.72 crore towards insured deposits
Significance
The action highlights RBI’s continued focus on maintaining financial stability and protecting depositors’ interests in the co-operative banking sector. The move also underlines the importance of strong capital adequacy, sound governance, and regulatory compliance for banks operating in India.