The Reserve Bank of India (RBI) announced that it has cancelled The Karwar Urban Co-operative Bank Ltd's license in Karnataka due to a lack of adequate capital and earning prospects. As a result, the bank will no longer conduct banking business after July 23, 2025.

"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 with immediate effect," the central bank's order read.

Key Highlights

• RBI revoked Karwar Urban Co‑op Bank’s licence on July 23 due to insufficient capital and earnings.
• Depositors are protected via DICGC insurance up to ₹5 lakh, covering 92.9% of account balances.

According to the RBI statement, the Registrar of Cooperative Societies in Karnataka has also been requested to issue an order for the bank's winding up and appointment of a liquidator. The RBI stated that the license was revoked because the Karwar Urban Co-operative Bank lacked sufficient capital and earning potential. As a result, it does not meet the requirements of the Banking Regulation Act.

The RBI stated that the bank's continued operations are detrimental to the interests of its depositors. "The bank with its present financial position would be unable to pay its present depositors in full; and public interest would be adversely affected if the bank is allowed to carry on its banking business any further," the central bank's announcement stated.

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Subject to the terms of the DICGC Act of 1961, each depositor is entitled to receive the deposit insurance claim amount of their deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC) upon liquidation, up to a maximum of Rs 5,00,000.

Based on the information provided by the bank, 92.90 percent of depositors are qualified to get their entire deposit back from DICGC. According to the RBI statement., as of June 30, 2025, DICGC had already paid Rs 37.79 crore of the total insured deposits under Section 18A of the DICGC Act, 1961, based on the depositors' willingness.