RBI has cancelled the license of a total of 12 cooperative banks in the last one year. Most of these are small urban cooperative banks, which were closed due to their poor financial condition and inability to comply with the rules. Which banks were affected? See the full list here …
The Reserve Bank of India (RBI) has cancelled the licenses of a total of 12 cooperative banks in the last one year (from July 2024 to July 2025) to maintain discipline in the banking sector. Most of these are small urban cooperative banks, which closed due to their poor financial condition and inability to comply with the rules. Which banks have been affected?
See the full list here …
1. Banaras Mercantile Sahakari Bank Varanasi, UP July 2024
2. City Co-operative Bank Mumbai, Maharashtra 2024
3. Purvanchal Cooperative Bank Ghazipur, UP 2024
4. Sumerpur Mercantile Urban Co-operative Bank Rajasthan 2024
5. Jai Prakash Narayan Nagari Sahakari Bank Bihar 2024
6. Sri Mahalakshmi Mercantile Co-operative Bank Tamil Nadu 2024
7. Hiriyur Urban Co-operative Bank Karnataka 2024
8. Anjana Urban Co-operative Bank Aurangabad, Maharashtra 22 April 2025
9. Colour Merchants Co-operative Bank Ahmedabad, Gujarat 16 April 2025
10. Imperial Urban Co-operative Bank Jalandhar, Punjab 25 April 2025
11. Shankarrao Mohite Patil Co-operative Bank Akluj, Maharashtra 11 April 2025
12. Karwar Urban Co-operative Bank Karnataka 22 July 2025
Of the 7 banks that closed in 2024, most of them closed between January-July 2024. 4 banks closed in April 2025, and Karwar Bank lost its licence in July 2025.
Why did RBI cancel the licenses?
Lack of capital: All the closed banks did not have sufficient capital and were unable to generate future earnings.
Danger to depositors: RBI says that the continuation of these banks was detrimental to the depositors as they were not able to repay the money.
Ignoring rules: Some banks were not following rules like KYC or were breaking the exposure limits, for which RBI also imposed fines.
How safe are customers’ money?
DICGC Insurance: Every depositor gets a maximum of ₹5 lakh back from DICGC (Deposit Insurance and Credit Guarantee Corporation), whether in savings, current or FD account.
Karwar Bank example: Here 92.9% of the account holders had deposits less than ₹5 lakh, so they will get the full amount. DICGC has already paid ₹37.79 crore.
Warning: If you have more than ₹5 lakh in your account, the remaining amount may be lost. Therefore, RBI advises that while choosing a bank, definitely check its financial condition.
Strict policy of RBI
RBI Deputy Governor Swaminathan J. has recently warned all cooperative banks to improve risk management and transparency, otherwise strict action will be taken. Apart from cancelling the license, RBI has also imposed fines on 8 big banks including Citi Bank, Punjab National Bank and Kotak Mahindra Bank for violating the rules in the last one year.
Lessons for the common man
1. Be cautious in small banks: Before depositing money in cooperative banks, do check their financial condition, RBI rating and credit history.
2. ₹5 lakh rule: Do not keep more than ₹5 lakh in a single bank, so that you can get full DICGC cover.
3. Be alert: If your bank is continuously incurring losses or getting fined by RBI, then immediately shift your account to another bank.
According to RBI, in the banks whose license is cancelled, more than 90% of the account holders get their entire money back because their deposit amount is less than ₹ 5 lakh.
