Why RBI Cancelled Yashwant Cooperative Bank’s License, And What Happens To Customers’ Money Now?

The banking licence of The Yashwant Co-operative Bank Ltd., Phaltan has been cancelled by the Reserve Bank of India. The bank will cease all its banking operations post closure on Tuesday and customers will not be able to deposit or withdraw money from its bank from the time of closure. Citing weakness of bank “RBI say in recent order on May 18 2026 that it took the step in light of the financial incapability of the bank. “ The bank does not have adequate capital and earning prospects,” the regulator said, indicating that the bank would not be able to satisfy minimum banking norms that safeguard safety and stability.

RBI Flags Financial Weakness And Capital Shortfall

The central bank also stated that the bank had also not complied with several key regulatory requirements that banks are expected to follow regarding how they operate, handle risk and safeguard customers’ money. The aim of these rules is to ensure that banks operate responsibly and don’t come at modelling loss to depositors.

Deposit Safety Concerns Raised By RBI

Explaining the urgency, “the continuance of the bank would be prejudicial to the interests of its depositors,” the RBI said. “The bank, with its present financial position, would not be able to pay itspresent depositors in full.”

RBI Issues Strict Warning on Public Interest

The RBI has stated that “public interest would be adversely affected if the bank is allowed to carry on its banking business any further”. Now that the licence is cancelled, the bank cannot do any banking business, which includes accepting new deposits and repaying deposits.

Maharashtra Orders Winding Up and Appoints Liquidator

Winding Up Of The Bank

Maharashtra Commissioner for Cooperation and Registrar of Cooperative Societies has instructed the winding up of the bank and appointed a liquidator. The liquidator will step in on the bank’s assets and use the money to pay the depositors and other persons.

DICGC Insurance Covers Deposits Up To ₹5 Lakh

Each depositor will receive ₹5 lakh of his money back thanks to insurance by Deposit Insurance and Credit Guarantee Corporation, the DICGC. This is the normal insurance cover given to everyone who has deposited money in a bank in India.

Majority Depositors To Receive Full Refund, Says RBI

It’s good news for all but few account holders. According to the banks own figures, ” about 99.02% of the depositors were entitled to recover full amount of their deposits from DICGC.” Basically you get your whole deposit back. The payout process is underway. RBI said that “as on 20-Apr-26, DICGC has paid ₹106.96 crore of the total insured deposits as on the date from the concerned depositors of the bank based on the willingness received.”

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