RBI Cancels License of Karwar Urban Co-operative Bank

• 24 Jul 2025
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As per the Reserve Bank of India (RBI) order dated 22 July 2025, the RBI has cancelled the license of the Karwar Urban Co-operative Bank Ltd, Karwar. As a result, the co-operative bank can no longer carry on banking operations. 

According to the official RBI website, the RBI cancelled the bank’s license due to the following reasons:

• The bank lacks adequate capital and earning potential, which means it does not comply with the provisions of Section 11(1) and Section 22(3)(d) in conjunction with Section 56 of the Banking Regulation Act, 1949. 

• The bank has failed to meet the requirements outlined in Sections 22(3)(a), 22(3)(b), 22(3)(c), 22(3)(d), and 22(3)(e), as well as Section 56 of the Banking Regulation Act, 1949. 

• The continuation of the bank could be detrimental to the interests of its depositors. 

• Given its current financial situation, the bank would be unable to fully repay its present depositors. 

• Allowing the bank to continue its banking operations would have adversely affected the public interest.

The Karwar Urban Co-operative Bank Ltd., Karwar, is prohibited from engaging in banking activities as a result of its license’s cancellation. This includes, among other things, the acceptance and repayment of deposits, as defined in Section 5(b) in conjunction with Section 56 of the Banking Regulation Act 1949, effective immediately. 

Upon liquidation, every depositor is entitled to receive an insurance claim amount for their deposits up to a maximum of Rs. 5,00,000 (Rupees five lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to the provisions of the DICGC Act 1961. 

According to data provided by the Kartar Urban Co-operative Bank Ltd., 92.90% of depositors are eligible to receive the full amount of their insured deposits from the DICGC. As of 30 June 2025, the DICGC has already disbursed Rs. 37.79 crore of the total insured deposits under Section 18A of the DICGC Act 1961 on the basis of requests received from the affected depositors of the bank.

Source: The Reserve Bank of India (RBI)