RBI Cancels License of This Bank — Will Depositors Get Their Money Back?
The decision, which took effect on Monday, May 19, means the bank has ceased all banking operations, including deposits, withdrawals, and cheque clearing.
In a fresh blow to cooperative banking in India, the Reserve Bank of India (RBI) has revoked the license of HCBL Co-operative Bank, headquartered in Lucknow, citing inadequate capital and poor cash flow. The decision, which took effect on Monday, May 19, means the bank has ceased all banking operations, including deposits, withdrawals, and cheque clearing.
Table of Contents
Liquidation Process Initiated
Following the revocation, the RBI has requested the Co-operative Commissioner and Registrar of Uttar Pradesh to begin winding up the bank’s affairs. A liquidator will be appointed to manage the closure process, as per standard regulatory procedures.
Also Read: Bharti Airtel Partners with Google to Offer Free Google One Cloud Storage for Six Months
98.69% of Depositors to Get Full Insurance Payout
In a move aimed at protecting depositors, the Deposit Insurance and Credit Guarantee Corporation (DICGC) will provide insurance coverage up to ₹5 lakh per depositor, including both principal and interest.
According to RBI data, 98.69% of HCBL’s depositors fall within this insurance limit. So far, the DICGC has already disbursed ₹21.24 crore under the scheme.
Regulatory Violations Underpin the RBI Action
The RBI stated that the bank was found non-compliant with multiple regulations under the Co-operative Banking Regulation Act, 1949. It noted that the bank’s continuation was not in the interest of its depositors, prompting the revocation to prevent further financial risk.
Capped Payout Regardless of Account Size
Depositors are reminded that the maximum payout per individual from DICGC remains ₹5 lakh, regardless of the total amount held in their accounts. There are no exceptions, even if customers had deposited more than this threshold.
Pattern of Cracking Down on Failing Cooperative Banks
The RBI has been actively weeding out financially unstable cooperative banks in recent years. Other banks whose licences were revoked recently include:
- Imperial Urban Co-operative Bank, Jalandhar (2025)
- Colour Merchants Co-operative Bank, Ahmedabad (2025)
- Ajanta Urban Co-operative Bank, Aurangabad (2025)
- Punjab and Maharashtra Co-operative Bank (2019)
