RBI has cancelled this bank's license! Will customers no longer be able to withdraw their own money?

The RBI has cancelled the license of Jijamata Mahila Sahakari Bank, located in Satara. This action was taken due to the bank's weak financial position and lack of capital. The bank will no longer be able to conduct any banking operations.

RBI cancels bank license: The Reserve Bank of India (RBI) on Tuesday cancelled the banking license of Jijamata Mahila Sahakari Bank, located in Satara district, Maharashtra. The RBI took this step because the bank's capital and earning prospects were insufficient and its financial situation was continuously deteriorating. According to the RBI, the bank will no longer be able to conduct any banking business from October 7, 2025. This means it will no longer have the authority to accept deposits or return deposits.

License cancelled before

It is worth noting that this bank has faced the RBI's strictness before. On June 30, 2016, the RBI cancelled the license of Jijamata Mahila Sahakari Bank. The bank subsequently appealed this decision, and on October 23, 2019, the appellate authority reinstated its license. However, the appellate authority also directed that a forensic audit be conducted for the financial year 2013-14 to assess its true financial position.

The bank did not cooperate, leaving the audit incomplete.

The RBI stated that it had appointed a forensic auditor for this audit, but the bank did not provide the necessary cooperation. Consequently, the forensic audit could not be completed, and the assessment of the bank's true financial position remained incomplete. Meanwhile, regular assessments conducted by the RBI found that the bank's position was steadily deteriorating.

The bank is unable to pay depositors.

The RBI statement stated that the bank lacks sufficient capital and earning potential. "In its current financial position, the bank is unable to fully refund the amount owed to all its depositors," the RBI stated in its order. The central bank also added that allowing the bank to continue operating would adversely impact public interest.

Following the cancellation of the license, the RBI has requested the Registrar of Cooperative Societies of Maharashtra to issue an order winding up the bank and appoint a liquidator. This means that the claims of its depositors and borrowers will now be settled by selling the bank's assets.

Depositors will receive insurance protection benefits of up to ₹5 lakh

The RBI stated that after the bank's closure, every depositor will receive an insurance claim of up to ₹5 lakh on their deposits under the Deposit Insurance and Credit Guarantee Corporation (DICGC). As of September 30, 2024, 94.41% of the bank's deposits were under DICGC insurance cover. This means that almost all small depositors' deposits are covered by this insurance protection.

What Depositors Need to Do

After the bank's closure, DICGC will pay depositors the balances in their accounts (up to ₹5 lakh). Depositors will be required to submit their KYC documents and account details to the liquidator.

RBI Continues Crackdown on Weak Banks

The RBI has taken similar action against several cooperative banks in recent years. This clearly indicates that the central bank will no longer allow any bank whose financial position is unstable or which jeopardizes the interests of depositors. This move by the RBI is aimed at ensuring that the country's banking system remains strong, transparent, and safe.

FAQs

1. When was the license of Jijamata Mahila Co-operative Bank cancelled?

The RBI has cancelled the bank's license effective October 7, 2025.

2. What is the reason for the cancellation?

The bank's capital was insufficient, it had no earning prospects, and its financial condition was continuously deteriorating.

3. What will happen to the bank's depositors now?

Each depositor will receive a refund of up to ₹5 lakh under the DICGC insurance scheme.

4. Has the bank's license been cancelled before?

Yes, the bank's license was cancelled in 2016, but was reinstated in 2019 after an appeal.

5. Who will oversee the bank's liquidation process?

A liquidator appointed by the Registrar of Cooperatives of Maharashtra will conduct the bank's liquidation process.