RBI cancels the licence of Indian Mercantile Co-operative Bank Ltd., Lucknow

The Reserve Bank of India (RBI), through an order dated February 11, 2026, has cancelled the banking licence of Indian Mercantile Co-operative Bank Ltd., Lucknow under Section 22 read with Section 56 of the Banking Regulation Act, 1949.

As a result, the bank ceased to carry on banking business with effect from the close of business on February 13, 2026. The Commissioner and Registrar of Cooperative Societies, Uttar Pradesh, has also been requested to issue an order for winding up of the bank and appointment of a liquidator.

Reasons for Cancellation

The RBI cancelled the licence of the bank on the following grounds:

The bank has inadequate earning prospects and therefore does not comply with the provisions of Section 22(3)(d) read with Section 56 of the Banking Regulation Act, 1949.

The bank has failed to comply with the requirements of Sections 22(3)(b), 22(3)(c), 22(3)(d) and 22(3)(e) read with Section 56 of the Act.

The continuance of the bank would be prejudicial to the interests of its depositors.

Public interest would be adversely affected if the bank were allowed to continue its banking operations.

Immediate Prohibition on Banking Operations

Following the cancellation of its licence, Indian Mercantile Co-operative Bank Ltd., Lucknow, is prohibited from conducting any banking business, including acceptance and repayment of deposits, as defined under Section 5(b) read with Section 56 of the Banking Regulation Act, 1949, with immediate effect.

Depositor Protection

Upon liquidation, each depositor will be entitled to receive deposit insurance up to ₹5,00,000 (Rupees five lakh only) 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, approximately 98.75% of depositors are eligible to receive the full amount of their deposits from DICGC. Further, as on December 31, 2025, the DICGC has already paid ₹2.90 crore towards insured deposits under Section 18A of the DICGC Act, 1961, based on the willingness received from the concerned depositors.