RBI cancels licence of Durga Co-operative Urban Bank, Vijayawada

What the Record Shows

The Reserve Bank of India cancelled the banking licence of The Durga Co-operative Urban Bank Ltd., Vijayawada, with the cancellation taking effect from the close of business on 12 November 2024. Per the Reserve Bank's press release of that date, the bank was directed to stop conducting banking business, and the Commissioner for Cooperation and Registrar of Co-operative Societies, Andhra Pradesh was requested to issue an order winding up the bank and to appoint a liquidator.

This is a prudential cancellation against the institution, not a criminal or enforcement action, and the order names no individual. The Reserve Bank held that the bank did not have adequate capital and earning prospects, and that, in its present financial position, it would be unable to pay its present depositors in full.

The order records five grounds in all: that the bank does not comply with the capital requirement, that it failed to meet several licensing requirements of the Banking Regulation Act, 1949, that its continuance is prejudicial to the interests of depositors, that it could not repay depositors in full, and that public interest would be adversely affected if it were allowed to carry on banking. On those findings, per the order effective 12 November 2024, the Reserve Bank withdrew the licence.

How It Worked

The cancellation cites specific provisions of the Banking Regulation Act, 1949 as applied to co-operative societies. Per the press release, the bank did not comply with Section 11(1) and Section 22(3)(d) read with Section 56, and had failed to comply with the requirements of Sections 22(3)(a), (b), (c), (d) and (e) read with Section 56. Section 11(1) sets the minimum capital and reserves a bank must maintain; the Section 22(3) grounds go to whether a bank can pay its depositors as their claims accrue and whether its affairs are being run in a way that is not detrimental to depositors.

In plain terms, the Reserve Bank concluded that the bank's capital had been eroded to the point where it no longer met the statutory floor, and that its earning prospects offered no realistic path back. A co-operative bank in that position cannot safely keep taking fresh deposits, because new money would be exposed to the same weakened balance sheet. Reported accounts of the bank described its loan book as heavily impaired, though the order itself rests on the statutory grounds of inadequate capital and earning prospects rather than on any stated bad-loan figure.

The procedural route for such cases runs from supervisory concern to a show-cause notice and then to cancellation once the Reserve Bank is satisfied that the position cannot be remedied. On cancellation, responsibility shifts to the state co-operative authorities: here, the Commissioner for Cooperation and Registrar of Co-operative Societies, Andhra Pradesh, who must order the winding up and appoint a liquidator to marshal the bank's assets and settle claims in the order the law prescribes.

The deposit-insurance mechanism was already in motion before the licence was pulled. Per the press release, the DICGC had already paid Rs 9.84 crore of the total insured deposits. The framework allows eligible depositors of a stressed bank to receive insured amounts up to Rs 5 lakh, so that repayment does not have to wait for the entire liquidation to conclude.

Who Lost Money

The people affected are the depositors of an urban co-operative bank serving Vijayawada. Per the Reserve Bank, on cancellation about 95.80% of the depositors were entitled to receive the full amount of their deposits from the DICGC, which insures each depositor up to Rs 5 lakh across principal and interest.

The corollary is that roughly one depositor in twenty-four held a balance above the Rs 5 lakh ceiling. Those depositors receive the insured Rs 5 lakh in full and then stand as creditors in the liquidation for the remainder, which is paid only to the extent the liquidator can realise value from the bank's assets. For a bank whose capital had already been exhausted, that recovery is usually partial and slow.

Against the insured deposits, the DICGC had already disbursed Rs 9.84 crore by the time of cancellation. The balance of insured claims is settled once the liquidator files verified depositor lists. Uninsured balances, by contrast, depend entirely on the liquidation outcome, and depositors above the cap should not assume they will recover the full excess.

Where It Stands Now

As of today, the cancellation stands and the bank has been barred from carrying on banking business since the close of business on 12 November 2024. The winding up and the appointment of a liquidator are for the Commissioner for Cooperation and Registrar of Co-operative Societies, Andhra Pradesh, acting on the Reserve Bank's request.

A prudential cancellation of this kind can be contested through the remedies available under the Banking Regulation Act, the co-operative societies law and the courts. As of the most recent official record reviewed, no order staying or reversing the 12 November 2024 cancellation has been reported. Were the position to change, the current status would govern, and this report would be updated.

Because this is a supervisory action against an institution rather than a criminal proceeding, no individual has been accused of any offence in connection with the cancellation. For depositors, the operative facts are unchanged: insured amounts up to Rs 5 lakh come through the DICGC, and anything above that turns on the liquidation.

What It Means

The case is a textbook illustration of why the Rs 5 lakh deposit-insurance cover matters. That cover applies per depositor per bank and includes both principal and accrued interest. The 95.80% figure recorded here is a reminder that the insurance protects the large majority of ordinary savers in full, while the minority with larger balances carry real risk when a small bank fails.

The practical lesson is to treat the insured limit as a planning number. Keeping any single bank's balance within Rs 5 lakh, or spreading larger savings across banks, converts the risk of a cancellation like this one from a potential loss into a covered claim. The insured status of a deposit does not depend on the bank's health at the time it fails.

Depositors can also watch for the earlier warning signs. When the Reserve Bank places a co-operative bank under directions, it says so publicly on rbi.org.in and the bank must display any withdrawal limits. Verifying a bank's standing through the regulator's own listings, rather than through branch reassurance, is the most reliable check available. A simple FD calculator helps size deposits against the insured limit, and the enforcement archive records comparable cases, including the cancellations of Imperial Urban Co-operative Bank, Jalandhar and Colour Merchants Co-operative Bank, Ahmedabad.

FAQ

What exactly did the Reserve Bank order?

The Reserve Bank cancelled the banking licence of The Durga Co-operative Urban Bank Ltd., Vijayawada with effect from the close of business on 12 November 2024. It held the bank lacked adequate capital and earning prospects and could not repay its depositors in full, and requested the Andhra Pradesh Commissioner for Cooperation and Registrar of Co-operative Societies to wind the bank up and appoint a liquidator.

Will depositors get their money back?

Most will. Per the Reserve Bank, about 95.80% of depositors are entitled to receive their full deposits from the DICGC, which insures up to Rs 5 lakh per depositor. Depositors with balances above that ceiling recover the insured amount and then rank as creditors in the liquidation for the rest.

How much has the DICGC already paid?

Per the press release, the DICGC had already paid Rs 9.84 crore of the total insured deposits by the time of cancellation. Eligible depositors receive insured amounts up to Rs 5 lakh, and the remaining insured claims are settled after the liquidator files verified depositor lists.

Can the cancellation be appealed?

A co-operative bank may pursue the review and appeal remedies available under the Banking Regulation Act, the co-operative societies law and the courts. As of the record reviewed for this report, no order staying or setting aside the cancellation has been reported.

Was anyone accused of wrongdoing?

No. This is a prudential action against the institution for failing to meet capital and depositor-protection requirements under the Banking Regulation Act, 1949. The order names no individual and alleges no offence.

Where can I read the official order?

The Reserve Bank's press release dated 12 November 2024 sets out the cancellation, the statutory grounds, the DICGC position and the winding-up request, and is published on rbi.org.in. It is linked below.

This report is based on the Reserve Bank of India press release dated 12 November 2024 cancelling the licence of The Durga Co-operative Urban Bank Ltd., Vijayawada and the official record reviewed on 30 July 2026.