**Summary:**
On July 22, 2025, the Reserve Bank of India (RBI) cancelled the license of The Karwar Urban Cooperative Bank Ltd., Karwar, effective close of business on July 23, 2025. This action prohibits the bank from conducting any banking business, including accepting and repaying deposits, as defined by Section 5(b) read with Section 56 of the Banking Regulation Act, 1949. The Registrar of Cooperative Societies, Karnataka, has been requested to issue an order for winding up the bank and appoint a liquidator.
The RBI's decision was based on the bank's inadequate capital and earning prospects, non-compliance with several sections of the Banking Regulation Act, 1949, the prejudice to the interests of its depositors, its inability to pay depositors in full, and the adverse effect on public interest if the bank continued operations.
Upon liquidation, each depositor is entitled to receive deposit insurance claim amount up to ₹5,00,000 (Rupees five lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to the DICGC Act, 1961. According to bank data, 92.90% of depositors are entitled to receive the full amount of their deposits from DICGC. As of June 30, 2025, DICGC had already disbursed ₹37.79 crore of the total insured deposits under Section 18A of the DICGC Act, 1961, based on willingness received from concerned depositors.
For further information, contact the Department of Communication, Central Office, Reserve Bank of India, Shahid Bhagat Singh Marg, Fort, Mumbai – 400 001. Phone: 022 2266 0502. Email: helpdoc@rbi.org.in. Website: www.rbi.org.in.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking sector.
The Karwar Urban Cooperative Bank Ltd., Karwar: A cooperative bank located in Karwar, Karnataka, whose license has been cancelled by the Reserve Bank of India.
Registrar of Cooperative Societies, Karnataka: The regulatory authority in Karnataka responsible for cooperative societies, requested to wind up The Karwar Urban Cooperative Bank Ltd.
Banking Regulation Act, 1949: An act of the Parliament of India to regulate banking companies in India.
Deposit Insurance and Credit Guarantee Corporation: An Indian deposit insurance company that provides insurance coverage on deposit accounts.
DICGC Act, 1961: The act that establishes the Deposit Insurance and Credit Guarantee Corporation and governs its operations.
Puneet Pancholy: Chief General Manager at Reserve Bank of India.
Mumbai, Maharashtra: Financial capital of India, location of the Central Office, Department of Communication of the Reserve Bank of India.
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
वेबसाइट
:
www.rbi.org.in/hindi
संचार वर्भाग, केंद्रीय कायाालय, शहीद भगत ससिंह मागा, फोटा, म िंबई - 400 001
Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502
July 23, 2025
RBI cancels the licence of The Karwar Urban Co-operative Bank Ltd., Karwar
The Reserve Bank of India (RBI), vide order dated July 22, 2025, has cancelled
the licence of “The Karwar Urban Co-operative Bank Ltd., Karwar”. Consequently,
the bank ceases to carry on banking business, with effect from the close of business
on July 23, 2025. The Registrar of Cooperative Societies, Karnataka has also been
requested to issue an order for winding up the bank and appoint a liquidator for the
bank.
The Reserve Bank cancelled the licence of the bank as:
i) The bank does not have adequate capital and earning prospects. As such, it
does not comply with the provisions of Section 11(1) and Section 22(3)(d) read
with Section 56 of the Banking Regulation Act, 1949;
ii) The bank has failed to comply with the requirements of Sections 22(3)(a),
22(3)(b), 22(3)(c), 22(3)(d) and 22(3)(e) read with Section 56 of the Banking
Regulation Act, 1949;
iii) The continuance of the bank is prejudicial to the interests of its depositors;
iv) The bank with its present financial position would be unable to pay its present
depositors in full; and
v) Public interest would be adversely affected if the bank is allowed to carry on its
banking business any further.
2. Consequent to the cancellation of its licence, “The Karwar Urban Co-operative
Bank Ltd., Karwar” is prohibited from conducting the business of ‘banking’ which
includes, among other things, acceptance of deposits and repayment of deposits as
defined in Section 5(b) read with Section 56 of the Banking Regulation Act, 1949 with
immediate effect.
3. On liquidation, every depositor would be entitled to receive deposit insurance claim
amount of his/her deposits up to a monetary ceiling of ₹5,00,000/- (Rupees five lakh
only) from Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to
the provisions of DICGC Act, 1961. As per the data submitted by the bank, 92.90% of
the depositors are entitled to receive full amount of their deposits from DICGC. As on
June 30, 2025, DICGC has already paid ₹37.79 crore of the total insured deposits
under the provisions of Section 18A of the DICGC Act, 1961 based on the willingness
received from the concerned depositors of the bank.
(Puneet Pancholy)
Press Release: 2025-2026/771 Chief General Manager