The Reserve Bank of India has cancelled the licence of HCBL Co-operative Bank Ltd., Lucknow, with effect from the close of business on May 19, 2025. The decision effectively bars the bank from carrying out any banking business, including the acceptance and repayment of deposits.
Following the cancellation, the RBI has also requested the Commissioner and Registrar of Cooperative Societies, Uttar Pradesh to issue an order for winding up the bank and appointing a liquidator.
The RBI stated that the bank’s licence was cancelled due to multiple regulatory violations and financial weaknesses.
The reasons cited include the bank’s lack of adequate capital and earning prospects, non-compliance with several sections of the Banking Regulation Act, 1949, and concerns that the bank’s continued operation would be prejudicial to the interests of its depositors. Moreover, the bank, in its current financial position, would be unable to repay its existing depositors in full, the RBI noted.
With the licence now cancelled, the bank is prohibited from conducting banking activities such as accepting and repaying deposits, as defined under Section 5(b) read with Section 56 of the Banking Regulation Act, 1949, with immediate effect.
On liquidation, depositors of the bank will be entitled to receive insurance claims of up to ?5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC), as per the provisions of the DICGC Act, 1961.
Notably, according to data submitted by the bank, 98.69% of the depositors are entitled to receive the full amount of their deposits from DICGC. As of January 31, 2025, the DICGC has already paid out Rs 21.24 crore in insured deposits based on consent received from the affected depositors.
This marks the fifth cooperative bank to lose its licence in the current financial year. Earlier, the RBI had cancelled the licences of the following cooperative banks: Imperial Urban Co-operative Bank Ltd., Jalandhar; Ajantha Urban Co-operative Bank Maryadit, Aurangabad; Colour Merchants Co-operative Bank Ltd., Ahmedabad; and Shankarrao Mohite Patil Sahakari Bank Ltd., Akluj.
The rising number of licence cancellations underscores the RBI’s strict stance on financial discipline and depositor protection in the cooperative banking sector.