Belgaum, June 18: The Reserve Bank of India (RBI) has cancelled the banking licence of Shree Mahalaxmi Urban Co-operative Credit Bank Ltd., Gokak, Karnataka, citing inadequate capital, poor earning prospects and non-compliance with regulatory requirements.
According to an RBI press release issued on June 18, 2026, the bank has been prohibited from carrying on banking business with effect from the close of business on June 18, 2026. The RBI has also requested the Registrar of Co-operative Societies, Karnataka, to initiate the process of winding up the bank and appoint a liquidator.
The central bank stated that the bank failed to comply with several provisions of the Banking Regulation Act, 1949. RBI further noted that the continuation of the bank’s operations would be detrimental to the interests of depositors and that the bank, in its present financial condition, would be unable to repay its existing depositors in full.
Following the cancellation of its licence, the bank is no longer permitted to accept deposits, repay deposits, or conduct any form of banking business.
RBI clarified that upon liquidation, depositors will be entitled to receive deposit insurance of up to ₹5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to applicable rules.
As per the data submitted by the bank, approximately 97.90 per cent of depositors are eligible to receive the full amount of their deposits under the DICGC insurance scheme. RBI also stated that, as of June 9, 2026, DICGC had already disbursed ₹88.21 crore of the total insured deposits to eligible depositors based on their willingness and claims.
The RBI said the action was taken in the larger public interest and to safeguard the interests of depositors.
