Payments
RBI revokes Mumbai co-operative bank licence, orders wind-up
The Reserve Bank of India cancelled the licence of Sarvodaya Co-operative Bank Ltd, Mumbai under the Banking Regulation Act, 1949 on 12 May 2026.
2026-05-13 · 1 min
RBI revokes Mumbai co-operative bank licence, orders wind-up
Background
The Reserve Bank of India cancelled the licence of Sarvodaya Co-operative Bank Ltd, Mumbai under the Banking Regulation Act, 1949 on 12 May 2026.
The RBIhttps://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR2475860F708F0B74E2CA25F3E7C882957E6.PDF prohibited the bank, with immediate effect, from accepting or repaying deposits as defined in Section 5b read with Section 56. It also asked the Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra to wind up the bank and appoint a liquidator.
Grounds for cancellation
The order cites five grounds: the bank lacks adequate capital and earning prospects, breaching Section 111 and Section 223d read with Section 56; it has failed to meet the requirements of Sections 223a to e read with Section 56; its continuance is prejudicial to depositors' interests; it cannot pay present depositors in full given its current financial position; and continued operations would be against public interest.
Depositor protection
Each depositor is entitled to receive deposit insurance up to ₹5,00,000 from the Deposit Insurance and Credit Guarantee Corporationhttps://www.dicgc.org.in/ under the DICGC Act, 1961. Based on bank-submitted data, 98.36% of depositors were entitled to receive the full amount of their deposits from DICGC as at the date of imposition of All Inclusive Directions. As of 31 March 2026, DICGC had paid ₹26.72 crore of insured deposits under Section 18A of the DICGC Act based on depositors' willingness.
Next steps
Sarvodaya Co-operative Bank must cease all banking business from the close of business on 12 May 2026. Counterparties should treat the prohibition as effective immediately. Depositor claims flow to the DICGC track upon liquidation, up to the ₹5,00,000 statutory cap; the consultation has not disclosed the total depositor headcount beyond the 98.36% coverage figure.
No formal industry reaction had surfaced at publication. Monitoring now shifts to the Registrar of Cooperative Societies, Maharashtra, whose issuance of the winding-up order and appointment of a liquidator will determine the timeline for DICGC processing under Section 18A.