RBI Licence Cancellation of Shimsha Sahakara Bank Reinstated After Petition Withdrawal

The Reserve Bank of India (RBI) has confirmed that the cancellation of Shimsha Sahakara Bank Niyamitha’s banking licence is now fully effective following the withdrawal of a writ petition in the Karnataka High Court. The bank, located in Maddur, Mandya District, Karnataka, had originally lost its licence through a Speaking Order dated July 05, 2024.

Despite the cancellation, operations were held in suspension due to interim court directions issued in July 2024. With the petition now dismissed, the licence cancellation has automatically come back into force.

Background On the Original Licence Cancellation

RBI had cancelled the banking licence of Shimsha Sahakara Bank on July 05, 2024, as communicated through its earlier press release. The cancellation meant the bank ceased carrying on banking business from the close of business on that date.

The decision was taken under the regulatory provisions governing co‑operative banks that fail to meet operational and prudential requirements. The order was issued after reviewing the bank’s financial condition and compliance position.

Extension Of Restrictions Amid Court Proceedings

An interim order issued by the Hon’ble High Court of Karnataka on July 25, 2024, had paused the immediate implementation of the licence cancellation. As a result, RBI extended the existing directive originally imposed on February 23, 2023.

This directive, which restricted the bank’s operations, continued to be extended through multiple press releases, including the latest extension up to the close of business on May 24, 2026. The directive ensured controlled operations while the court reviewed the bank’s petition.

Revival Of RBI’s Cancellation Order

On February 17, 2026, the Hon’ble High Court of Karnataka dismissed Writ Petition No. 19767 of 2024 as withdrawn. With the petition no longer under judicial consideration, RBI’s July 05, 2024, order cancelling the bank’s licence automatically revived.

This means the bank is once again subject to the regulatory consequences of licence cancellation without any legal stay. RBI has reinstated the regulatory position as it existed before the interim order.

Prohibition On Conducting Banking Activities

Following the revival of the cancellation order, Shimsha Sahakara Bank is now prohibited from conducting the business of ‘banking’ as defined under Section 5(b) read with Section 56 of the Banking Regulation Act, 1949. It is also barred from undertaking any business activities listed under Section 6 of the Act.

The prohibition takes effect immediately, aligning with the regulator’s authority over co‑operative banking entities. This ensures that deposit‑related and lending‑related risks do not continue under an unlicensed framework. RBI’s communication reinforces compliance with statutory banking norms.

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Conclusion

RBI has formally reinstated the cancellation of Shimsha Sahakara Bank’s licence after the related court petition was withdrawn. Earlier restrictions imposed due to the interim order no longer apply, and the original July 05, 2024, cancellation order is now effective.

The bank is prohibited from performing any banking functions under the Banking Regulation Act. The development brings finality to the regulatory action initiated nearly two years earlier.

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