In a major regulatory action, the Reserve Bank of India (RBI) has cancelled the licence of Sarvodaya Co-operative Bank due to inadequate capital and weak earning prospects.
The bank has stopped carrying out banking operations with effect from the close of business on May 12, 2026. The RBI has also directed the Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra, to begin the winding-up process and appoint a liquidator for the bank.
Following the liquidation process, depositors will be eligible to receive deposit insurance claims of up to ₹5 lakh through the Deposit Insurance and Credit Guarantee Corporation (DICGC).
According to the RBI, around 98.36% of the bank’s depositors were entitled to receive the full amount of their deposits from DICGC as on the date when All Inclusive Directions were imposed on the lender.
The central bank further stated that DICGC had already paid ₹26.72 crore towards insured deposits as of March 31, 2026.
Explaining the decision, the RBI said the bank, in its current financial condition, would not be able to fully repay its existing depositors. The regulator also noted that allowing the bank to continue operations would negatively impact public interest.
The RBI added that the lender had failed to comply with multiple regulatory requirements. Following the licence cancellation, the bank has been barred from conducting any banking-related activities, including accepting and repaying deposits.
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