The Reserve Bank of India (RBI) has cancelled the banking licence of Shree Mahalaxmi Urban Co-operative Credit Bank Ltd. with effect from the close of business on June 18, 2026. The central bank has also directed the Registrar of Co-operative Societies, Karnataka, to initiate the bank’s winding-up process and appoint a liquidator.

According to the RBI, the bank lacked adequate capital and sustainable earning prospects and failed to comply with several regulatory requirements under the Banking Regulation Act, 1949. The regulator stated that allowing the bank to continue operations would be detrimental to depositors’ interests and contrary to public interest, as the bank was not in a position to fully repay its existing depositors.

Following the licence cancellation, the bank has been prohibited from carrying out banking activities, including accepting and repaying deposits.

The RBI further said that upon liquidation, eligible depositors will be entitled to receive deposit insurance coverage of up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation, subject to applicable rules. Based on the bank’s data, around 97.9% of depositors are eligible to receive the full amount of their insured deposits. As of June 9, 2026, DICGC had already disbursed Rs 88.21 crore towards insured deposits to eligible depositors who had submitted their claims.