License of Shimsha Sahakara Bank of Karnataka cancelled! The lockdown started as soon as the petition was rejected by the High Court, know what will happen to the customers’ ₹ 5 lakh?:

Mandya/Bengaluru. A big and worrying news has come out from the banking sector of Karnataka. Reserve Bank of India (RBI) located at Maddur in Mandya district Shimsha Sahakara Bank Niyamitha The license has been completely cancelled. After almost two years of legal battle and the intervention of the High Court, the rules have finally won. This decision is a big blow for those customers whose money was deposited in this cooperative bank. Let us know why the bank was locked and now how will the depositors get their money back.

Root of controversy: ‘Action’ started from 2024

The beginning of this case 05 July 2024 When the RBI ordered the cancellation of the bank’s license in view of its poor financial condition and disregard for rules.

High Court stay: The bank filed a writ petition (No. 19767/2024) in the Karnataka High Court against this order. On July 25, 2024, the court had given an interim order and stayed the action of RBI.

Final decision in 2026: Due to the pending case in the court, the bank kept getting extension from time to time, which was last extended till May 24, 2026. But 17 February 2026 The High Court rejected the bank’s petition ‘due to withdrawal’. As soon as the petition was rejected, the old order of RBI became effective again.

Strict restrictions imposed on banks: What will banks not be able to do now?

Revoking the license means that the bank can no longer operate as a normal financial institution. Under the Banking Regulation Act, 1949, these restrictions have come into effect immediately on the bank:

Ban on banking operations: Now the bank can neither accept new deposits from anyone nor can give loan or money to anyone.

Use of name: The bank will no longer be able to use the word ‘Bank’ or ‘Banking’ in its name.

Financial transaction closure: Any type of electronic transfer or check clearing will no longer be possible through this bank.

Relief for customers: Insurance cover up to ₹ 5 lakh

After the license of the bank is cancelled, the biggest question is about the deposits of the customers. Here Deposit Insurance and Credit Guarantee Corporation (DICGC) The role of becomes most important.

Security of ₹5 lakh: According to the rules, every depositor will be given a maximum amount including his principal amount and interest. ₹5,00,000 (five lakh rupees) Insurance cover up to Rs.

Liquidation Process: Now a liquidator will be appointed for the bank, who will settle the liabilities by selling the assets of the bank.

How to get money: Depositors have to submit their claim by filling a prescribed form, after which the insurance amount will be sent to their accounts by DICGC.

Frequently Asked Questions (FAQs)

1. I have an account in Shimsha Sahakara Bank, is my money lost?

No, if your deposit amount is ₹5 lakh or less, it is completely safe and will be refunded by DICGC. For amounts above ₹5 lakh, you will have to wait for the auction of the bank’s assets and completion of the liquidation process.

2. What do I have to do now to withdraw my money?

RBI will now appoint a liquidator. After this, notices will be issued in local newspapers and outside the bank. You have to submit the claim along with your KYC documents.

3. Can banks reopen?

No, after the High Court rejected the petition and the license was canceled by the RBI, the chances of reopening of the bank are now over.