RBI Cancels Licence of Sarvodaya Co-operative Bank Over Financial Concerns

The Reserve Bank of India (RBI) has cancelled the banking licence of Mumbai-based Sarvodaya Co-operative Bank Ltd with effect from the close of business on May 12, 2026. The regulator cited inadequate capital levels and weak earning potential as key reasons behind the decision. 

RBI Revokes Banking Licence of Sarvodaya Co-operative Bank

Reserve Bank of India stated that the licence of Sarvodaya Co-operative Bank has been cancelled due to the lender’s insufficient capital position and lack of sustainable earning prospects.

According to the regulator, the bank failed to comply with certain provisions of the Banking Regulation Act. The RBI added that allowing the bank to continue its operations could adversely affect depositor interests.

The licence cancellation came into effect from the close of business on May 12, 2026.

Banking Operations Discontinued With Immediate Effect

Following the cancellation order, Sarvodaya Co-operative Bank has been barred from carrying out banking activities.

This includes accepting fresh deposits, processing withdrawals, and conducting regular banking transactions. The RBI has also instructed the Maharashtra Registrar of Co-operative Societies to begin the winding-up process and appoint a liquidator for the bank.

The winding-up process is intended to manage the settlement of liabilities and facilitate depositor claim procedures.

Deposit Insurance Cover Available for Depositors

The RBI stated that depositors of the bank would be eligible to receive deposit insurance claims of up to ₹5 lakh under the Deposit Insurance and Credit Guarantee Corporation (DICGC) framework.

According to the central bank, around 98.36% of depositors are expected to receive the full value of their deposits through the insurance mechanism.

As of March 31, 2026, DICGC had already disbursed ₹26.72 crore towards insured deposits linked to the bank.

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Conclusion

The RBI’s decision to cancel the licence of Sarvodaya Co-operative Bank follows concerns related to the bank’s financial health and regulatory compliance. While banking operations have been discontinued, most depositors are expected to receive their insured deposits through the DICGC framework as the winding-up process moves forward.

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