In a significant regulatory move, the Reserve Bank of India (RBI) has canceled the licenses of four cooperative banks in April 2025 due to financial instability and failure to comply with banking norms. The action underscores the RBI’s ongoing efforts to safeguard the banking system and protect depositor interests.
If you're wondering how this affects you, here’s a detailed breakdown of the affected banks, reasons for cancellation, and what depositors need to know.
RBI Cancels Licenses of 4 Banks: Full List and Details
The RBI announced the permanent closure of the following cooperative banks:
1. Ajantha Urban Co-operative Bank Maryadit, Aurangabad (Maharashtra)
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License canceled on: April 22, 2025
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Reason: Inadequate capital and weak earnings
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Depositor protection: 91.55% of depositors are eligible to receive the full insured amount (up to ₹5 lakh) via DICGC
2. Colour Merchants Co-operative Bank Ltd, Ahmedabad (Gujarat)
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License canceled on: April 16, 2025
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Reason: Insufficient capital and no viable earning prospects
3. Imperial Urban Co-operative Bank Ltd, Jalandhar (Punjab)
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License canceled on: April 25, 2025
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Reason: Financial instability and capital deficiency
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Depositor protection: 97.79% of depositors are covered by DICGC for insured refunds
4. Anjana Urban Co-operative Bank Ltd, Aurangabad (Maharashtra)
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License canceled on: April 22, 2025
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Reason: Regulatory non-compliance and poor financial health
Why Did RBI Cancel These Bank Licenses?
The RBI cancels licenses of 4 banks primarily due to:
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Poor financial condition
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Inadequate capital to run banking operations safely
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Lack of earning potential to sustain future growth
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Failure to comply with regulatory requirements under the Banking Regulation Act
These decisions are part of the RBI’s broader effort to maintain trust in the Indian banking system and prevent systemic risks.
What Should Depositors Do Now?
If you held an account with any of these banks, here’s what you need to know:
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You’re protected under DICGC: The Deposit Insurance and Credit Guarantee Corporation (DICGC) covers up to ₹5 lakh per depositor per bank.
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Claim Process: Affected customers will be contacted by their respective banks or can reach out to DICGC to initiate their refund claims.
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Liquidation Process: The respective state governments will oversee the liquidation of the banks and assist in ensuring eligible claims are processed smoothly.
What This Means for the Banking Sector
The fact that the RBI cancels licenses of 4 banks in a single month highlights the regulator's strict stance on financial mismanagement. It also serves as a warning to other cooperative banks to maintain regulatory standards and capital adequacy.
Final Thoughts
While the sudden closure of these banks may worry account holders, it's important to note that most depositors will receive their insured funds. The RBI’s proactive approach aims to prevent bigger risks in the future and build long-term stability in India’s cooperative banking sector.
If you’re a depositor, check whether your bank is on the list and take timely steps to secure your claim.