The Reserve Bank of India (RBI) has canceled the license of Karwar Urban Co-operative Bank of Karnataka. Now this bank will not be able to provide any banking service from 23 July 2025. This decision was taken because the bank does not have capital as per the requirement. The bank has no strong possibility of earning in future.
Why was this decision taken?
RBI said in a statement that Karwar Urban Co-operative Bank was constantly struggling with financial crisis. He did not have the necessary capital and was not in a position to protect the deposit amount of the customers. Therefore, the Reserve Bank canceled his license and asked the ‘Registrar of Cooperative Societies, Karnataka’ to close the bank and appoint a liquidator liquidator.
What will the depositors get?
RBI said that after the closure of the bank, every depositor will be returned to the amount of up to Rs 5 lakh under the deposit insurance and loan guarantee corporation (DICGC). That is, customers whose deposit amount is Rs 5 lakh or less will get the entire amount back.
According to the bank’s data, about 92.9% of the depositors will get their full deposit amount. DICGC has already made a payment of about Rs 37.79 crore by 30 June 2025. RBI says that the bank has neither the money required to continue business now, nor is there any hope of earning profits in future. Therefore this step has been taken to protect customers.
What to do customers?
Customers whose deposit amount is stuck in the bank can claim through DICGC. After the process is completed, eligible customers will get their money back. This step has been taken by the RBI towards the safety of customers and maintaining the financial system better.