In a concerning turn of events for banking customers, the Reserve Bank of India (RBI) has once again revoked the licence of a cooperative bank. This time, the HCBL Co-operative Bank in Lucknow has been affected, with the RBI citing insufficient capital and inadequate cash flow as the primary reasons for the decision. As of Monday, May 19, HCBL Co-operative Bank ceased all operations. The RBI has officially requested that the Co-operative Commissioner and Registrar of Uttar Pradesh initiate the closure process and appoint a liquidator to wind up the bank’s operations. (News18)
Depositor Insurance Coverage: For customers affected by the closure, the Deposit Insurance and Credit Guarantee Corporation (DICGC) will provide insurance coverage of up to Rs 5 lakh for each depositor’s account. The RBI has assured that 98.69% of depositors will receive the full amount they are owed under the DICGC’s coverage policy. As of now, DICGC has already disbursed Rs 21.24 crore of the total insured deposits, which includes both principal and interest. (News18)
According to the RBI, HCBL Co-operative Bank failed to meet several regulatory requirements under the Co-operative Banking Regulation Act, 1949. The bank’s operations were no longer in the best interests of its depositors, leading to the decision to revoke its licence. As a result, the bank has immediately stopped all banking operations, including deposits, withdrawals, and the clearing of cheques. (News18)
For those with deposits in the bank, the only recourse in case of insolvency is the DICGC’s insurance cover. While the DICGC guarantees up to Rs 5 lakh per depositor, this is irrespective of how much money is held in the account. This means that no matter the total deposit in the affected bank, the maximum insurance payout is capped at Rs 5 lakh. (News18)
The RBI’s recent move follows a pattern of revoking licences of various cooperative and urban banks facing financial instability. Other banks whose licences have been cancelled include Imperial Urban Co-operative Bank in Jalandhar (2025), Colour Merchants Co-operative Bank in Ahmedabad (2025), Ajanta Urban Co-operative Bank in Aurangabad (2025), and the Punjab and Maharashtra Co-operative Bank (2019). (News18)
