RBI Orders Closure of Sarvodaya Co-operative Bank Over Insolvency and Compliance Failures
The Reserve Bank of India (RBI) vide an order dated May 12, 2026, has cancelled the licence of Sarvodaya Co-operative Bank Ltd., Mumbai, under the provisions of the Banking Regulation Act, 1949. Accordingly, the bank has ceased to carry on banking business w.e.f. close of business on May 12, 2026. The RBI has also asked the Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra, to start the process of winding up the bank and to appoint a liquidator.
The RBI cancelled the bank’s licence because of the following:
- It does not have enough capital and does not have good prospects of earning profits in the future. Therefore, it does not meet the required legal conditions under the Banking Regulation Act, 1949.
- The bank has also failed to comply with several other requirements mentioned under the same law.
- The RBI further stated that allowing the bank to continue operating would harm the interests of its depositors.
Given its current financial condition, the bank would not be able to repay its depositors in full. The RBI concluded that it would not be in the public interest to allow the bank to continue its banking operations.
Since the bank is going into liquidation, depositors will not lose all their money. Every depositor is eligible to receive up to Rs 500,000 of their deposited amount under deposit insurance. As per the bank’s records, around 98.36% of depositors are eligible to receive their full deposited amount because their deposits are within the Rs 5 lakh insurance limit.
As of March 31, 2026, DICGC has already paid Rs 26.72 crore to depositors who agreed to receive their insured amount under the rules of the DICGC Act. This payment was made after getting consent from the concerned depositors.
