The Reserve Bank of India has imposed operational restrictions on Mogaveera Co-operative Bank Ltd. under provisions of the Banking Regulation Act, 1949, citing concerns over the bank's financial health and failure to adequately address supervisory issues.
Under the directions issued on June 11, 2026, and effective from the close of business on June 12, 2026, the bank has been barred from undertaking several key banking activities without prior approval from the RBI. These include granting or renewing loans, making investments, accepting fresh deposits, raising borrowings, incurring liabilities, disbursing payments, entering into compromises or arrangements, and selling or transferring assets.
To safeguard depositors' interests while considering the bank's liquidity position, the RBI has permitted depositors to withdraw up to Rs 1 lakh from their savings, current or other eligible accounts, subject to the conditions specified in the directions. The bank has also been allowed to meet essential operational expenses such as employee salaries, rent and electricity bills.
According to the RBI, it had been engaging with the bank's board and senior management to improve its functioning. However, the absence of sufficient corrective measures and continued supervisory concerns necessitated regulatory intervention.
The central bank clarified that eligible depositors remain protected under the deposit insurance scheme administered by the Deposit Insurance and Credit Guarantee Corporation. Depositors may claim insurance coverage of up to Rs 5 lakh per depositor, subject to applicable rules and verification procedures under the DICGC Act, 1961.
The RBI emphasized that the restrictions do not amount to cancellation of the bank's banking licence. The bank will continue to operate under the prescribed conditions while efforts are made to improve its financial position.
The directions will remain in force for six months from June 12, 2026, and will be reviewed by the RBI based on developments and in the interest of depositors.