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The Reserve Bank of India has cancelled the licence of The Yashwant Co-operative Bank Ltd., Phaltan, and the bank will stop all banking operations after Tuesday. Customers will not be able to deposit or withdraw money from the bank once business closes that day.
In its order dated May 18, 2026, the RBI said it took the step because the bank was financially too weak to continue. "The bank does not have adequate capital and earning prospects," the RBI said, adding that this meant the bank could not meet basic banking norms meant to ensure safety and stability. The central bank also noted that the bank had failed to comply with several important regulatory requirements that govern how banks must operate, manage risk, and protect customer money. These rules exist to make sure banks run properly and do not put depositors at risk. Explaining the urgency, the RBI stated, "The continuance of the bank will be prejudicial to the interests of its depositors." It further said, "The bank with its present financial position would be unable to pay its present depositors in full." The RBI concluded that "public interest would be adversely affected if the bank is allowed to carry on its banking business any further." With the licence cancelled, the bank is now prohibited from doing any banking business. That includes taking new deposits and repaying deposits. The Maharashtra Commissioner for Cooperation and Registrar of Cooperative Societies has been asked to wind up the bank and appoint a liquidator. The liquidator will take over the bank's assets and use the proceeds to pay depositors and other claimants. For customers, deposits are protected by insurance from the Deposit Insurance and Credit Guarantee Corporation, or DICGC. Every depositor will get back up to 5 lakh of their money. This is the standard insurance cover available to all bank customers in India. The situation is reassuring for most account holders. As per the bank's own data, "about 99.02% of the depositors were entitled to receive full amount of their deposits from DICGC." That means nearly every customer will get their entire deposit back. The payout process has already started. The RBI said that "as on April 20, 2026, DICGC has already paid 106.96 crore of the total insured deposits... based on the willingness received from the concerned depositors of the bank." If a depositor had more than 5 lakh in the bank, they would still get 5 lakh for sure. Any balance above that will depend on what the liquidator recovers after selling the bank's loans and other assets. The RBI regularly monitors banks to ensure public money remains safe. When a bank cannot meet key safety standards and cannot repay depositors in full, the regulator steps in and shuts it down. The deposit insurance system then ensures small and regular savers do not lose their hard-earned money. (ANI)
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