The Reserve Bank of India has stepped up action against financially weak co-operative banks, cancelling the licence of Shirpur Merchants Co-operative Bank over serious concerns about its financial stability.
In a statement issued on Monday, the RBI said the bank lacks adequate capital and has no viable earning prospects. Following the decision, the bank ceased operations at the close of business on April 6, 2026. The central bank has also directed the Commissioner for Cooperation and the Registrar of Cooperative Societies, Maharashtra, to begin the winding-up process and appoint a liquidator.
What happens to depositors’ money?
With the bank heading for liquidation, depositors are eligible for insurance cover of up to Rs5 lakh under the Deposit Insurance and Credit Guarantee Corporation scheme.
RBI data indicates that about 99.7% of depositors are likely to receive their full deposits under this cover. As of January 31, 2026, the DICGC has already paid out Rs48.95 crore towards insured deposits, based on claims received.
Why was the licence cancelled?
The RBI said the action was taken due to the bank’s weak financial position, highlighting insufficient capital and lack of sustainable income to continue operations.
Given these conditions, the bank would be unable to repay its depositors in full. “The bank’s continued operations would be detrimental to the interests of its customers,” the RBI noted.
Following the cancellation, the bank has been barred from carrying out any banking activities, including accepting or repaying deposits, with immediate effect.
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