Mumbai, July 23 : The Reserve Bank of India (RBI) announced on Wednesday that it has cancelled the licence of The Karwar Urban Co-operative Bank Ltd in Karnataka as it does not have adequate capital and earning prospects.

Consequently, the bank ceases to carry on banking business, with effect from the close of business on July 23, 2025.

'The Karwar Urban Co-operative Bank Ltd., Karwar, is prohibited from conducting the business of 'banking' which includes, among other things, acceptance of deposits and repayment of deposits with immediate effect,' the RBI order stated.

The Registrar of Cooperative Societies, Karnataka, has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank, according to the RBI statement.

The RBI said the licence has been cancelled as the Karwar Urban Co-operative Bank does not have adequate capital and earning prospects. As such, it does not comply with the provisions of the Banking Regulation Act.

The continuance of the bank is prejudicial to the interests of its depositors, the RBI said.

'The bank with its present financial position would be unable to pay its present depositors in full; and public interest would be adversely affected if the bank is allowed to carry on its banking business any further,' the RBI statement explained.

On liquidation, every depositor would be entitled to receive the deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to the provisions of the DICGC Act, 1961.

As per the data submitted by the bank, 92.90 per cent of the depositors are entitled to receive the full amount of their deposits from DICGC. As of June 30, 2025, DICGC has already paid Rs 37.79 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961, based on the willingness received from the concerned depositors of the bank, the RBI statement added.

/IANS