The Reserve Bank of India (RBI), through an order dated July 22, 2025, has cancelled the banking licence of The Karwar Urban Co-operative Bank Ltd., Karwar. As a result, the bank ceased to carry on banking operations from the close of business on July 23, 2025. The RBI has also requested the Registrar of Co-operative Societies, Karnataka, to issue an order for the bank’s winding up and to appoint a liquidator.

The licence was cancelled due to several critical reasons, including:

Inadequate capital and lack of viable earning prospects, rendering the bank non-compliant with Sections 11(1) and 22(3)(d), read with Section 56 of the Banking Regulation Act, 1949.

Failure to meet requirements under Sections 22(3)(a), (b), (c), (d), and (e) of the same Act.

Its continued operation was deemed detrimental to the interests of depositors.

The bank’s financial condition indicated its inability to fully repay its depositors.

Allowing the bank to continue operations was found to be against public interest.

Following the licence cancellation, the bank is barred from performing any banking activities—including accepting or repaying deposits—as defined under Section 5(b) read with Section 56 of the Banking Regulation Act, 1949.

Upon liquidation, depositors are eligible to receive insurance compensation of up to ?5 lakh each from the Deposit Insurance and Credit Guarantee Corporation (DICGC), as per the DICGC Act, 1961. According to the bank’s data, 92.90% of depositors are entitled to receive their entire deposit amount. As of June 30, 2025, DICGC has already disbursed ?37.79 crore in insured deposits based on consents received from eligible depositors under Section 18A of the DICGC Act.