RBI cancels licence of Sarvodaya Co-operative Bank over weak finances

The central bank cited inadequate capital, weak earnings prospects, and regulatory non-compliance while directing the Maharashtra registrar to initiate winding-up proceedings

The Reserve Bank of India (RBI) on Tuesday cancelled the licence of Sarvodaya Co-operative Bank, citing inadequate capital, poor earnings prospects, and non-compliance with provisions of the Banking Regulation Act.

 

RBI said the co-operative bank would cease to carry on banking business effective May 12, 2026. The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra, has also been requested to initiate the process of winding up the bank and appoint a liquidator.

 

According to RBI, the bank lacked adequate capital and earning prospects and had failed to comply with multiple regulatory requirements under the Banking Regulation Act. RBI added that continuation of the bank’s operations would be prejudicial to the interests of depositors and public interest.

   

“The bank with its present financial position would be unable to pay its present depositors in full,” RBI said, adding that public interest would be adversely affected if the bank is allowed to carry on its banking business any further.

 

Following the licence cancellation, the bank is prohibited from undertaking banking business, including acceptance and repayment of deposits, with immediate effect.

 

The RBI said depositors would be entitled to receive deposit insurance claims of up to ₹5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC). According to data submitted by the bank, around 98.36 per cent of depositors were eligible to receive the full amount of their deposits from DICGC as on the date of imposition of all-inclusive directions.

 

DICGC had already paid ₹26.72 crore towards insured deposits as of March 31, 2026.