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RBI Cancels Sarvodaya Co-operative Bank’s Licence-Depositors Safe Up to Rs5 Lakh

May 14, 2026
total limit).

According to RBI,  98.36% of depositors  are expected to receive the full amount of their insured deposits.

WHAT IS DICGC DEPOSIT INSURANCE?

The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a wholly owned subsidiary of RBI. It was created to protect depositors if a bank fails.

Key features:

  • Insurance limit: Rs 5 lakh

  • Coverage basis: Per depositor, per bank

  • Includes: Principal + accrued interest

  • Applicable to commercial banks, cooperative banks, and small finance banks

Important clarification:  The Rs5 lakh limit applies to the  total combined deposits  in one bank, not per account.

FAQ (FREQUENTLY ASKED QUESTIONS)

Q1: When did RBI cancel the licence of Sarvodaya Co-operative Bank?
A: On 12 May 2026 after business hours.

Q2: What is the main reason for cancelling the bank’s licence?
A: Inadequate capital base, weak earnings prospects, non-compliance with norms, and risk to depositor interests.

Q3: Can depositors get their money back?
A: Yes, deposits up to Rs5 lakh per depositor are insured by DICGC. About 98.36% of depositors will get the full amount.

Q4: What is DICGC?
A: Deposit Insurance and Credit Guarantee Corporation – a wholly owned RBI subsidiary that protects depositors if a bank fails.

Q5: Does the Rs5 lakh insurance limit apply per account or per depositor?
A: Per depositor, per bank (total of all accounts in that bank combined).

EXAM-FOCUSED POINTS

  • Bank name:  Sarvodaya Co-operative Bank Ltd, Mumbai

  • Action taken:  Licence cancelled by RBI

  • Date of order:  12 May 2026 (after business hours)

  • Legal basis:  Banking Regulation Act, 1949

  • Reasons:  Inadequate capital, weak earnings, regulatory failures, risk to depositors

  • Immediate effect:  No deposits, withdrawals, loans, or regular banking

  • Next steps:  Winding up and liquidator appointment by Maharashtra cooperative authorities

  • Deposit protection:  DICGC insurance – up to rs5 lakh per depositor per bank

  • Coverage includes:  Savings, FD, current account, RD, and interest

  • Percentage of fully protected depositors:  98.36%

  • DICGC:  Wholly owned subsidiary of RBI

  • Insurance

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