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 failure to meet key regulatory requirements under the Banking Regulation Act, 1949.
The RBI order, issued on June 16, takes effect from the close of business on June 18, 2026. The central bank has also requested the Karnataka Registrar of Co-operative Societies to initiate the bank’s winding-up process and appoint a liquidator.
According to RBI, the bank’s continuation would be prejudicial to the interests of depositors, as its current financial position does not permit full repayment of existing deposits. The regulator noted that the bank failed to comply with several licensing and prudential norms prescribed under the Banking Regulation Act.
Following the licence cancellation, the bank has been barred from carrying out banking operations, including accepting and repaying deposits.
In a relief to customers, RBI said that on liquidation, depositors will be eligible to receive deposit insurance of up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC). As per available data, 97.9% of the bank’s depositors are entitled to receive the full amount of their deposits under the insurance cover.
The RBI further revealed that DICGC has already disbursed Rs 88.21 crore towards insured deposits as of June 9, 2026, based on consent received from eligible depositors.