In a major regulatory action, the Reserve Bank of India (RBI) has cancelled the licence of Indian Mercantile Co-operative Bank Ltd., Lucknow with effect from the close of business on February 13, 2026. The decision was taken through an order dated February 11, 2026, under Section 22 read with Section 56 of the Banking Regulation Act, 1949.
With the cancellation coming into force, the bank is prohibited from carrying on banking business, including acceptance and repayment of deposits, as defined under the Act. The RBI has also requested the Commissioner and Registrar of Cooperative, Uttar Pradesh, to initiate winding-up proceedings and appoint a liquidator for the bank.
According to the central bank, the cooperative bank lacked adequate earning prospects and failed to comply with multiple statutory requirements under Sections 22(3)(b), 22(3)(c), 22(3)(d) and 22(3)(e) read with Section 56 of the Banking Regulation Act, 1949.
The RBI noted that allowing the bank to continue operations would be prejudicial to the interests of depositors and against public interest. The action underscores the regulator’s stance that financially weak banks without viable revival prospects cannot be allowed to operate at the cost of depositor safety.
Amid concerns, there is significant relief for customers. Upon liquidation, every depositor will be entitled to receive deposit insurance up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC), in accordance with the DICGC Act, 1961.
Importantly, as per data submitted by the bank, nearly 98.75% of depositors are eligible to receive the full amount of their deposits under the insurance cover. As of December 31, 2025, DICGC has already paid Rs 2.90 crore towards insured deposits under Section 18A of the Act, based on depositors’ willingness.
The move highlights the RBI’s continued focus on protecting depositor interests while tightening oversight of cooperative banks that fail to meet regulatory and financial standards.
