RBI cancelled licence of Sarvodaya Co-operative Bank Ltd., Mumbai with immediate effect under Section 22 of Banking Regulation Act, 1949, citing weak financial health and regulatory non-compliance. Bank prohibited from conducting banking operations including deposit acceptance. Maharashtra Registrar requested to initiate winding-up proceedings. DICGC provides ₹5 lakh insurance coverage per depositor. 98.36% depositors eligible for full recovery. ₹26.72 crore already disbursed by March 2026.

This licence cancellation exemplifies RBI's supervisory powers under the Banking Regulation Act, 1949, particularly for cooperative banks that pose systemic risks. The action was triggered by the bank's failure to maintain capital adequacy, meet statutory requirements under Sections 11(1) and 22(3)(a-e), and inability to safeguard depositor interests. The case highlights the critical role of DICGC insurance in protecting small depositors—with 98.36% receiving full coverage under the ₹5 lakh limit, demonstrating the scheme's effectiveness for smaller banks. For RBI Grade B candidates, this showcases practical application of banking supervision concepts including prompt corrective action, licence revocation procedures, and deposit insurance mechanisms. The Maharashtra government's role in cooperative society winding-up reflects the dual regulatory structure for cooperative banks. The ₹26.72 crore disbursement figure illustrates DICGC's operational efficiency in crisis situations, reinforcing the importance of deposit insurance in maintaining financial system stability and public confidence.