RBI revokes licence of Mumbai’s Sarvodaya Co-operative Bank over poor financial health

The Reserve Bank of India (RBI) on Tuesday revoked the permit of Mumbai-based Sarvodaya Co-operative Bank, citing insufficient capital and poor future earnings potential.

The RBI announced in an official statement that the institution must stop all banking operations effective from the close of business on 12 May 2026. Following this decision, the central bank requested that the Commissioner for Cooperation and Registrar of Cooperative Societies in Maharashtra initiate winding-up proceedings and designate a liquidator to oversee the process.

"As per the data submitted by the bank, about 98.36% of the depositors were entitled to receive the full amount of their deposits from DICGC as on the date of imposition of All Inclusive Directions," the central bank said.

Under the liquidation protocol, each depositor is eligible to claim a reimbursement of their holdings up to a ceiling of ₹5 lakh. These payments are facilitated by the Deposit Insurance and Credit Guarantee Corporation (DICGC). Records show that as of 31 March 2026, the DICGC had already disbursed ₹26.72 crore to cover insured deposits.

"Public interest would be adversely affected if the bank is allowed to carry on its banking business any further," RBI said, and added the lender has failed to comply with several regulatory requirements.

Explaining the regulatory action, the RBI noted that the bank's current financial standing made it impossible for it to fully repay its existing depositors. As a result of the license revocation, Sarvodaya Co-operative Bank is strictly forbidden from engaging in "banking" activities, including accepting new deposits or processing withdrawals.

RBI likely to pay record dividend to govt this year

India’s central bank is expected to pay its largest-ever dividend to the government, providing a fiscal buffer to navigate economic pressures stemming from the persistent Middle East conflict, according to PTI sources. This follows a substantial payout last year, where the RBI transferred a record ₹2.69 lakh crore for 2024–25—a 27% jump from the ₹2.11 lakh crore provided the year prior.

The RBI Board is expected to finalise the specific dividend amount during a meeting scheduled for later this month. These surplus transfers are calculated using the revised Economic Capital Framework (ECF). This guideline mandates that the Contingent Risk Buffer (CRB) remain stationed between 4.50 and 7.50 per cent of the central bank's total balance sheet.

Official Budget records indicate the Centre projects ₹3.16 lakh crore from the RBI, state-run banks, and various financial entities for 2026–27, representing a 3.75% increase over the current year. However, sources suggest these estimates were cautious; actual payouts are likely to surpass Budget expectations for FY27, as public sector banks (PSBs) also achieved record-breaking profits during FY26.

Enhanced asset quality, robust credit growth, and increased revenue drove this PSB's profitability throughout 2025–26. Total operating profits hit ₹3.21 lakh crore, while collective net profits rose 11.1% to a peak of ₹1.98 lakh crore—the fourth straight year of gains for the sector. Furthermore, dividends from other public enterprises and investments are projected at ₹75,000 crore, up from ₹71,000 crore this fiscal year.