The Reserve Bank of India (RBI) has revoked the license of Shree Mahalaxmi Urban Co-operative Credit Bank in Karnataka due to its poor financial condition and lack of capital. The bank, situated in Gokak, failed to meet certain provisions of the Banking Regulation Act, 1949, and lacks the necessary capital for repaying its depositors in full. As a result, the bank will cease all banking operations from June 18, 2026.
The RBI expressed concerns that allowing the bank to continue operating could harm depositors’ interests and erode public trust in the cooperative banking sector. Consequently, the Shree Mahalaxmi Urban Co-operative Credit Bank is now prohibited from conducting any banking activities, including accepting new deposits and repaying existing ones. The RBI has also urged the Registrar of Co-operative Societies, Karnataka, to begin the bank’s winding-up process and appoint a liquidator.
Depositors are assured protection under the deposit insurance framework managed by the Deposit Insurance and Credit Guarantee Corporation (DICGC). The RBI estimates that nearly 98% of the bank’s depositors will receive their insured deposits in full through the DICGC once the liquidation process commences.
