Shirpur Merchants’ Co-operative Bank: RBI Licence Cancelled
Why in the news
The RBI withdrew the banking licence of a Maharashtra urban co-operative lender after concluding it could not safely continue taking public deposits.
Key facts
| Point | Detail |
|---|---|
| Bank | The Shirpur Merchants’ Co-operative Bank (Maharashtra) |
| Operations stopped | Close of business on April 6, 2026 (no deposit taking or repayment) |
| Reason | Not enough capital and earning prospects; cannot pay depositors in full |
| Winding up | Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra, asked to wind up and appoint a liquidator |
| Deposit insurance | Up to ₹5,00,000 per depositor (principal plus interest) |
| Coverage | About 99.7% of depositors eligible for full payout |
| Paid so far | ₹48.95 crore by January 31, 2026, on willingness forms |
Background: licence cancellation
- The RBI acts as watchdog; a bank whose capital falls below the required minimum (CRAR, capital to risk-weighted assets ratio) cannot safely handle public money.
- Letting such a bank carry on would be prejudicial to depositors’ interests.
- A liquidator sells assets such as buildings, furniture and recovers loans.
- Recoveries first repay DICGC for claims it settled, then remaining depositors or creditors.
Exam angle
- Insurer: Deposit Insurance and Credit Guarantee Corporation (DICGC); cover limit ₹5 lakh.
- Winding-up of a co-operative bank is handled by the state Registrar of Cooperative Societies.
- Relevant ratio: CRAR.