👨💻 By Prashant Marathe | EduInvesting.in | May 19, 2025
🧾 At a Glance:
After RBI axed HCBL Co-operative Bank Ltd., Lucknow, a not-so-quiet question is ringing across India’s small towns: Are other co-op banks safe?
The answer? Not really.
Many co-operative banks are teetering on the edge — plagued by poor governance, outdated tech, political interference, and loan books messier than a toddler’s dinner table.
So, in true EduInvesting style, here are 5 co-operative banks that are either under RBI’s microscope or hanging by a financial thread — and why you should care.
1️⃣ The Kapol Co-operative Bank Ltd. (Mumbai)
📍Location: Mumbai, Maharashtra
⚠️ Status: Under RBI Directions since 2017 (yes, still)
Why it’s in trouble:
- Withdrawals capped at embarrassing levels.
- NPA party going strong — loans were distributed like free Diwali sweets.
- No license cancellation yet, but RBI has extended directions 10+ times — because apparently, suspense is the new governance.
Depositor pain: ₹500 withdrawal limit for years. If you’ve ₹5L in savings, congrats — you can withdraw ₹1.37 per day until your grandkids retire.
2️⃣ Punjab & Maharashtra Co-operative (PMC) Bank
📍Location: Mumbai-headquartered, pan-India branches
⚰️ Status: Merged into Unity Small Finance Bank (2022) — but wounds still fresh.
Why it’s in trouble (or was):
- A ₹6,500 crore scam linked to HDIL.
- Top brass manipulated software to hide NPA data.
- Thousands of senior citizens couldn’t access savings for years.
Takeaway: This scandal became the poster child of co-op banking failure. Even Netflix wouldn’t greenlight such a plot — too unrealistic.
3️⃣ Rupee Co-operative Bank Ltd. (Pune)
📍Location: Pune, Maharashtra
🔥 Status: Licence cancelled by RBI in 2022, liquidation initiated
Why it failed:
- Persistent financial weakness.
- Inability to pay depositors fully.
- Operated under RBI directions for 9 years before the plug was pulled.
Depositor status: ₹5 lakh DICGC insurance applied. For the rest — “thoughts and prayers.”
4️⃣ Sangli Sahakari Bank Ltd. (Mumbai)
📍Location: Mumbai
🟡 Status: Under Directions since 2021
Why it’s shaky:
- High NPAs, regulatory non-compliance, and erosion of net worth.
- Withdrawal limits in place, indicating trouble.
Investor mood: This one’s on RBI life support. And we all know how this show ends.
5️⃣ Seva Vikas Co-operative Bank Ltd. (Pune)
📍Location: Pune, Maharashtra
❌ Status: Licence cancelled by RBI in 2022
Why it’s toast:
- Operating losses.
- Capital erosion beyond repair.
- Wouldn’t be able to repay depositors — so RBI said “Namaste.”
Interesting bit: This bank’s licence was cancelled after it was under RBI’s radar for 6 years.
⚠️ Honorable Mentions: Still on RBI Radar
| Bank Name | Location | Status |
|---|---|---|
| Shivajirao Bhosale Bank | Pune | Under Directions |
| Independence Co-op Bank | Nashik | Restrictions in place |
| City Co-operative Bank | Mumbai | Limited withdrawal allowed |
🧠 EduInvesting Take: Why Are Co-Op Banks Failing?
Co-op banks have:
- Weak governance — board members often appointed through political favour.
- Bad loan practices — uncle’s friend’s nephew gets a loan, while real entrepreneurs get rejection slips.
- Low tech adoption — some still operate like it’s 1995.
- Minimal RBI oversight until it’s too late.
And depositors? Always the punching bags.
💡 What Should You Do?
- Keep deposits under ₹5L per bank (DICGC limit).
- Avoid banks under “directions” from RBI — it’s not a badge of honour.
- Use RBI’s official site to check if your bank is safe:
👉 https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx
Or better yet — just search the bank’s name + RBI + “directions” on Google. If results look like a medical diagnosis, run.
🏦 Final Words
Co-operative banks were meant to empower the common man. Sadly, they’ve now become a breeding ground for financial mismanagement, corruption, and slow-motion collapses.
So unless you want to spend your retirement watching RBI press releases, keep your money where governance is boring and interest rates are lower — because safety > returns.
