The Reserve Bank of India (RBI) has cancelled the banking licence of HCBL Co-operative Bank Ltd., Lucknow, through an order dated May 19, 2025. As a result, the bank has ceased all banking operations effective from the close of business on the same day.
The RBI stated that the decision was made due to the bank’s inadequate capital and lack of sustainable earning prospects, rendering it non-compliant with the provisions of Section 11(1) and Section 22(3)(d) read with Section 56 of the Banking Regulation Act, 1949. Additionally, the bank failed to meet the requirements of several other clauses under Section 22(3) of the Act.
The regulator noted that the continued operation of the bank would be detrimental to the interests of depositors, as the institution is not in a position to fully repay its existing depositors. Allowing the bank to continue would also go against public interest, the RBI emphasized.
Following the cancellation of its licence, HCBL Co-operative Bank is no longer permitted to conduct banking operations, including accepting or repaying deposits, as defined under Section 5(b) read with Section 56 of the Banking Regulation Act, 1949.
The RBI has also requested the Commissioner and Registrar of Co-operative Societies, Uttar Pradesh, to initiate the bank’s winding-up process and appoint a liquidator.
As part of the liquidation process, depositors will be eligible to receive insurance claims of up to Rs 5 lakh per depositor from the Deposit Insurance and Credit Guarantee Corporation (DICGC), as per the DICGC Act, 1961. According to the bank's data, 98.69% of depositors are entitled to receive their full deposits under this provision. As of January 31, 2025, the DICGC has already disbursed Rs 21.24 crore towards insured deposits, based on consents received from the respective depositors.