RBI Cancels License of Shree Mahalakshmi Urban Cooperative Credit Bank in Gokak
The Reserve Bank of India cancelled the banking licence of Shree Mahalakshmi Urban Cooperative Credit Bank, headquartered in Gokak, Belagavi district, with immediate effect on June 18, citing a severe deterioration in the bank’s financial health and its inability to protect depositors’ interests.
The central bank’s decision follows a finding that the cooperative lender can no longer repay its customers. Insufficient capital, no realistic path to future profitability, and repeated non-compliance with provisions of the Banking Regulation Act, 1949 collectively pushed the RBI to pull the plug. All transactions at the bank stand frozen from June 18.
Depositors now face the prospect of recovering their money through a winding-up process. The Registrar of Co-operative Societies, Karnataka has already moved the RBI, requesting an order to wind up the bank’s operations and appoint a liquidator to handle the remaining assets and liabilities.
The RBI made its reasoning clear — allowing the bank to continue operating in its current state would actively harm the very depositors it was meant to serve. When a bank cannot meet its payment obligations and holds no credible prospect of turning viable, the regulator’s priority shifts firmly toward protecting those who entrusted their savings to it.
Gokak, a town in northern Karnataka’s Belagavi district, has seen its residents who banked with Shree Mahalakshmi Urban Cooperative Credit Bank left in uncertainty over their deposits. Under the Deposit Insurance and Credit Guarantee Corporation framework, eligible depositors are entitled to insurance cover up to the prescribed limit per account.
This cancellation adds Shree Mahalakshmi Urban Cooperative Credit Bank to a growing list of financially stressed urban cooperative banks across Karnataka that have faced regulatory action in recent years. Depositors concerned about their claims are advised to watch for the official liquidator’s appointment notice from the Karnataka Registrar of Co-operative Societies.
📰 Source: Udupi Times