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RBI Cancels Licence Of The Kapol Co-operative Bank Over Inadequate Capital


The Reserve Bank of India (RBI) has taken a significant step by cancelling the license of The Kapol Co-operative Bank Limited, a Mumbai-based cooperative bank. This decision was made primarily due to concerns regarding the bank’s inadequate capital and earning prospects, which raised questions about its ability to fulfill its commitments to depositors.

The RBI’s Action

The RBI, in a statement, announced the cancellation of The Kapol Co-operative Bank Limited’s license. According to the central bank, this cancellation means that the cooperative bank is prohibited from conducting banking activities, which encompass functions such as accepting deposits and repaying deposits. This decision was made effective immediately, leaving the bank unable to perform its core functions.

Winding Up and Liquidation

In addition to the license cancellation, the RBI has requested the Additional Secretary & Central Registrar of Cooperative Societies, Ministry of Cooperation, to issue an order for winding up the bank. Furthermore, a liquidator will be appointed to oversee the bank’s liquidation process. This step is significant as it marks the beginning of the bank’s dissolution and the distribution of its assets.

Impact on Depositors

One of the most critical concerns in such situations is the impact on depositors. The RBI has assured that every depositor will be entitled to receive a deposit insurance claim amount of their deposits, up to a monetary ceiling of ₹5 lakh, from the Deposit Insurance and Credit Guarantee Corporation (DICGC). This is a significant relief for depositors who may have been anxious about losing their hard-earned money.

It is noteworthy that approximately 96.09 percent of the depositors are entitled to receive the full amount of their deposits from DICGC. This demonstrates the government’s commitment to safeguarding the interests of the vast majority of depositors.

The Bank’s Financial Position

The RBI’s decision to cancel the license was not taken lightly. The central bank cited The Kapol Co-operative Bank Limited’s inadequate capital and earning prospects as a primary reason for its action. In its statement, the RBI expressed concerns that the bank’s current financial position would render it unable to repay its depositors in full.

As of July 24, 2023, DICGC had already disbursed ₹230.16 crore of the total insured deposits, based on the willingness received from the concerned depositors of the bank. This highlights the urgency of the situation and the need to protect the interests of depositors.


The cancellation of The Kapol Co-operative Bank Limited’s license by the RBI serves as a reminder of the importance of sound financial management and regulatory compliance in the banking sector. While the immediate impact is felt by the bank and its depositors, it also sends a broader message about the RBI’s commitment to maintaining the stability and integrity of India’s financial system.

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