The Reserve Bank of India (RBI) has cancelled the license of Maharashtra-based The Yashwant Co-operative Bank located in Phaltan.
The central bank said the co-operative bank did not have enough capital and had poor future earning prospects.
RBI also stated that the bank failed to comply with certain rules under the Banking Regulation Act.
According to the regulator, the bank was no longer in a position to fully repay depositors with its current financial condition.
The bank officially stopped operations after the close of business on May 19, 2026.
What Happens to Depositors’ Money?
RBI has assured depositors that most customers will receive their money through deposit insurance protection.
Under the Deposit Insurance and Credit Guarantee Corporation (DICGC) rules, depositors are eligible for insurance coverage of up to Rs 5 lakh.
According to RBI:
99.02% of depositors are expected to receive their full deposits
DICGC has already paid around Rs 106.96 crore as of April 20, 2026
The central bank has also asked the Maharashtra Cooperative Commissioner and Registrar to:
Shut down the bank
Appoint a liquidator
Begin the formal liquidation process
Why RBI Cancelled the Bank’s License
RBI said the bank lacked:
Adequate capital
Sustainable income prospects
Financial stability
The regulator also found that the bank was unable to meet certain legal and operational requirements under banking laws.
When a bank is unable to protect depositor interests or maintain financial health, RBI can revoke its banking license to prevent further risks.
RBI Tightening Action Against Weak Financial Institutions
This is not the first time RBI has taken strict action against banks and financial companies.
Earlier, RBI had also cancelled the license of:
The Karwar Urban Co-operative Bank in Karnataka
Paytm Payments Bank due to regulatory violations
Apart from banks, RBI has also recently cracked down on non-banking financial companies (NBFCs).
Around 150 NBFC Licenses Also Cancelled
In a major regulatory action earlier this month, RBI reportedly cancelled the Certificates of Registration (CoR) of nearly 150 NBFCs across India.
The highest number of cancelled registrations came from:
Delhi
West Bengal
The move is part of RBI’s broader effort to strengthen financial discipline and improve customer protection in the banking and financial sector.
Why This Matters for Customers
RBI’s action highlights the importance of financial stability and regulatory compliance for banks and NBFCs.
For customers, the case is also a reminder to:
Check the financial health of smaller banks
Stay aware of DICGC insurance coverage limits
Monitor official RBI announcements regarding regulated institutions
While most depositors of The Yashwant Co-operative Bank are expected to recover their deposits, the closure may still create temporary inconvenience for account holders and local customers.
