RBI Revives Cancellation of Shimsha Sahakara Bank Licence in Karnataka
The Reserve Bank of India (RBI) has confirmed that the cancellation of the banking licence of Shimsha Sahakara Bank Niyamitha, located in Maddur in Mandya district, Karnataka, is now fully effective after a related court case was withdrawn.
According to an RBI press release issued on March 5, 2026, the central bank stated that the earlier order cancelling the bank’s licence has been revived following the dismissal of a petition in the Karnataka High Court.
Background of the Licence Cancellation
The RBI had originally cancelled the banking licence of Shimsha Sahakara Bank through a speaking order dated July 5, 2024, citing regulatory concerns. Following that order, the bank ceased conducting banking operations from the close of business on the same day.
However, the matter was challenged in the Karnataka High Court through Writ Petition No. 19767 of 2024. Based on an interim order issued by the court on July 25, 2024, RBI had temporarily extended certain regulatory directives imposed on the bank.
These directives, initially issued in February 2023, were extended multiple times, with the latest extension valid until May 24, 2026.
Court Decision Clears the Way
The legal proceedings concluded when the Karnataka High Court dismissed the petition as withdrawn on February 17, 2026. Following this development, the RBI confirmed that its original order cancelling the bank’s licence has now come back into force.
As a result, Shimsha Sahakara Bank is now prohibited from conducting banking activities as defined under the Banking Regulation Act, 1949.
Banking Operations Prohibited
With the revival of the cancellation order, the bank cannot carry out any banking business as defined under Section 5(b) of the Banking Regulation Act. It is also barred from engaging in other financial activities covered under Section 6 of the Act.
The RBI stated that these restrictions take effect immediately, ensuring that the bank does not conduct any form of banking operations.
The development marks the final regulatory step in the closure process of the cooperative bank after the legal challenge was withdrawn.