The Reserve Bank of India (RBI) has cancelled the banking licence of Mumbai-based Sarvodaya Co-operative Bank Ltd. with immediate effect.
The central bank said the co-operative bank did not have enough capital and had weak earning prospects, making it unsafe to continue operations.
With this decision, the bank has stopped all banking activities from the close of business on May 12, 2026.
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Why Did RBI Cancel the Bank’s Licence?
According to RBI, Sarvodaya Co-operative Bank failed to comply with several rules under the Banking Regulation Act.
The central bank also said the financial condition of the bank had become very weak.
RBI stated that allowing the bank to continue operations could negatively affect depositors and public interest.
The bank was reportedly not in a position to repay all depositors fully with its current financial strength.
The Maharashtra Commissioner for Cooperation and Registrar of Cooperative Societies has also been asked to begin the process of winding up the bank and appoint a liquidator.
What Will Happen to Customers’ Money?
After the cancellation of the licence, many customers are worried about their deposits.
However, RBI has clarified that depositors will receive insurance protection through the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Under DICGC rules, every depositor is eligible to receive up to Rs 5 lakh of their deposits, subject to applicable conditions.
According to the bank’s submitted data:
Around 98.36 percent of depositors are expected to get their full deposited amount back under the insurance scheme.
As of March 31, 2026, DICGC had already paid Rs 26.72 crore to eligible depositors.
Bank Can No Longer Accept or Repay Deposits
Following the RBI order, Sarvodaya Co-operative Bank is no longer allowed to carry out banking activities.
This includes:
Accepting new deposits
Repaying deposits
Running normal banking services
The restrictions came into effect immediately after the licence cancellation announcement.
What Depositors Should Do Now
Customers of the bank should stay updated about the liquidation and insurance claim process. Eligible depositors can claim insured amounts through DICGC as per official procedures.
Experts say depositors should keep important account documents and identity proofs ready for any future claim-related process.