The Reserve Bank of India (RBI) has cancelled the licence of Sarvodaya Co-operative Bank Ltd. with effect from the close of business on May 12, 2026, citing inadequate capital, poor earning prospects and non-compliance with banking regulations.

Following the cancellation, the bank has been barred from carrying out banking activities, including acceptance and repayment of deposits, with immediate effect.

The RBI said the Maharashtra Commissioner for Cooperation and Registrar of Cooperative Societies has been requested to initiate the winding-up process and appoint a liquidator for the bank.

According to the central bank, Sarvodaya Co-operative Bank failed to maintain adequate capital and did not comply with multiple provisions of the Banking Regulation Act, 1949. The RBI also stated that the continuation of the bank’s operations would be prejudicial to the interests of depositors and public interest.

The regulator noted that the bank, in its current financial condition, would be unable to repay depositors in full if allowed to continue operations.

Under the provisions of the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961, depositors will be eligible to receive insurance claims of up to Rs 5 lakh on their deposits, subject to applicable rules.

The RBI said around 98.36% of the bank’s depositors are entitled to receive the full amount of their deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as on the date when restrictions were imposed on the bank.

As of March 31, 2026, the DICGC had already disbursed Rs 26.72 crore towards insured deposits under Section 18A of the DICGC Act based on claims received from eligible depositors.