RBI cancels licence of Karwar Urban Co-op Bank over inadequate capital

The Reserve Bank on Wednesday said it has cancelled the licence of Karnataka-based The Karwar Urban Co-operative Bank as it does not have adequate capital and earning prospects.

Consequently, the bank ceases to carry on banking business, with effect from the close of business on July 23, 2025.

The Registrar of Cooperative Societies, Karnataka has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank, the RBI said in a statement.

On liquidation, every depositor would be entitled to receive the deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5 lakh from Deposit Insurance and Credit Guarantee Corporation (DICGC).

As per the data submitted by the bank, 92.9 per cent of the depositors are entitled to receive the full amount of their deposits from DICGC, RBI said.

As of June 30, 2025, DICGC has already paid Rs 37.79 crore of the total insured deposits.

Giving details, the RBI said the cooperative does not have adequate capital and earning prospects.

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

The RBI also said that the continuance of the bank is prejudicial to the interests of its depositors.