Kapol Cooperative Bank Limited

Kapol Cooperative Bank Limited was an Indian multi-state scheduled urban co-operative bank headquartered in Mumbai, Maharashtra. Established in 1939 as a credit society for members of the Kapol community, it developed into a banking institution serving retail customers, depositors and borrowers primarily in Maharashtra and Gujarat. Its community-oriented origins shaped both its customer base and institutional identity, while its later status as a scheduled urban co-operative bank placed it within the regulatory framework administered by the Reserve Bank of India (RBI). The bank’s business was centered on conventional co-operative banking services, including deposit accounts, lending and related payment and account services. Its branch network extended beyond Maharashtra into Gujarat, giving it a regional rather than nationwide operating footprint. The institution’s history also included periods of governance and financial stress. Allegations and investigations connected bank personnel and directors with irregular transactions, including cases involving forged letters of credit and alleged diversion of funds. These matters contributed to concerns about internal controls, management oversight and the quality of the bank’s loan and asset book. The RBI first imposed significant operating restrictions in March 2017 under Section 35A of the Banking Regulation Act, 1949. The restrictions included a withdrawal ceiling of ₹3,000 per account and limits on granting new loans or accepting new deposits without prior regulatory permission. The measures were extended repeatedly, remaining relevant through 2021 and 2022. They were intended to protect depositors while the bank’s financial condition and compliance position were assessed, but they also constrained the institution’s ability to operate normally and rebuild earnings. In June 2021, Kapol Bank consented to a possible merger with Cosmos Co-operative Bank. The proposed combination was considered in the context of Kapol’s continuing financial difficulties and Cosmos Bank’s previous experience acquiring other co-operative banks. The merger did not prevent subsequent regulatory action against Kapol Bank. On 25 September 2023, the RBI cancelled the bank’s banking licence, citing inadequate capital, non-compliance with statutory and operational requirements, poor earning prospects and the bank’s inability to pay depositors in full. The cancellation ended its authority to conduct banking business. The Central Registrar of Co-operative Societies ordered liquidation on 8 November 2023 and appointed Shardul S. Jadhav as liquidator. Deposit insurance became a central part of the resolution process. By July 2023, before or during the later liquidation process, the Deposit Insurance and Credit Guarantee Corporation had reportedly disbursed ₹230.16 crore to 96.09% of depositors, subject to the insured-deposit ceiling of ₹5 lakh. Recovery of remaining assets, settlement of claims and related legal proceedings continued under the liquidator. In April 2024, the RBI removed Kapol Bank from the Second Schedule to the Reserve Bank of India Act, 1934. The liquidator’s term was later extended through November 2025 for continuing recovery and legal work. Kapol Bank is therefore best understood as a defunct Indian banking brand whose institutional history ended in regulatory cancellation and liquidation rather than a continuing commercial operation.

Kapol Cooperative Bank originated in 1939 as a credit society established for the Kapol community. Over time, it expanded beyond its original credit-society role and became a scheduled urban co-operative bank. The institution was based in Mumbai and developed a regional presence in Maharashtra and Gujarat. Its activities included deposit-taking, lending and other conventional banking services, with its community orientation remaining an important part of its identity. By the early 2000s, the bank was facing increasing governance and financial difficulties. The public record includes several criminal investigations involving directors and former officers. In 2003, a bank director received bail in an extortion case. In 2013, director Hiren Mehta was arrested in connection with allegations that he assisted three businessmen in siphoning off ₹14.5 crore through forged letters of credit. In 2019, former bank officer Jayanta Dimbeshwar Das was arrested in relation to a separate letters-of-credit scam allegedly involving ₹15 crore. These cases did not represent ordinary product or marketing developments; they formed part of a wider deterioration in confidence concerning the bank’s controls, management and financial condition. The RBI intervened formally in March 2017 by imposing directions under Section 35A of the Banking Regulation Act, 1949. Customers were restricted to withdrawals of ₹3,000 per account, while the bank could not issue new loans or accept new deposits without regulatory approval. The restrictions were extended several times, including extensions that continued into April 2021 and October 2022. The measures constrained the bank’s day-to-day business and reflected the regulator’s concerns about its ability to protect depositors and meet applicable requirements. In June 2021, Kapol Bank consented to a possible merger with Cosmos Co-operative Bank. Cosmos had previously acquired several co-operative banks, making it a potential resolution or consolidation partner. The proposed merger was ultimately not sufficient to restore Kapol Bank’s regulatory position. In January 2025, the RBI approved the merger, according to the available reference material, although the bank had already lost its banking licence and entered liquidation in the preceding period. On 25 September 2023, the RBI cancelled Kapol Bank’s licence. The reasons cited included insufficient capital, poor prospects for earnings, non-compliance with provisions of the Banking Regulation Act and the bank’s inability to repay depositors in full. The cancellation terminated its banking authorization. On 8 November 2023, the Central Registrar of Cooperative Societies ordered liquidation and appointed Shardul S. Jadhav as liquidator. Depositor protection became a major part of the wind-down. By July 2023, the DICGC had reportedly paid ₹230.16 crore to 96.09% of depositors under the applicable insurance framework, with insured deposits covered up to ₹5 lakh. The liquidation process continued to involve asset recovery, claims administration and legal proceedings. In April 2024, the RBI removed the institution from the Second Schedule to the RBI Act, 1934. The liquidator’s term was extended to November 2025, indicating that recovery and litigation remained unresolved after the formal end of banking operations.

• 2025

  Liquidator’s term extended

  [1]Kapol Co-operative Banken.wikipedia.org

  The liquidator’s term was extended to November 2025 to continue recovery and legal proceedings.

• 2024

  Removed from the RBI Second Schedule

  [1]Kapol Co-operative Banken.wikipedia.org

  The RBI excluded Kapol Bank from the Second Schedule to the RBI Act, 1934.

• 2023

  Banking licence cancelled

  [1]Kapol Co-operative Banken.wikipedia.org

  The RBI cancelled Kapol Bank’s licence on 25 September 2023.

• 2023

  Liquidation ordered

  [1]Kapol Co-operative Banken.wikipedia.org

  The Central Registrar of Cooperative Societies ordered liquidation and appointed Shardul S. Jadhav as liquidator on 8 November 2023.

• 2021

  Potential Cosmos Bank merger considered

  [1]Kapol Co-operative Banken.wikipedia.org

  Kapol Bank consented to a potential merger with Cosmos Co-operative Bank.

• 2019

  Former officer arrested in alleged scam

  [1]Kapol Co-operative Banken.wikipedia.org

  Former officer Jayanta Dimbeshwar Das was arrested in connection with an alleged ₹15 crore letters-of-credit scam.

• 2017

  RBI imposes banking restrictions

  [1]Kapol Co-operative Banken.wikipedia.org

  The RBI imposed withdrawal, lending and deposit-taking restrictions under Section 35A of the Banking Regulation Act.

• 2013

  Director arrested in letters-of-credit case

  [1]Kapol Co-operative Banken.wikipedia.org

  Director Hiren Mehta was arrested over allegations involving forged letters of credit and the alleged diversion of ₹14.5 crore.

• 2003

  Director receives bail in extortion case

  [1]Kapol Co-operative Banken.wikipedia.org

  A bank director was granted bail in an extortion case.

• 1939

  Credit society established

  [1]Kapol Co-operative Banken.wikipedia.org

  Kapol Bank was established as a credit society serving the Kapol community.

A community-rooted urban co-operative bank serving the Kapol community and regional customers in Maharashtra and Gujarat.

• Retail banking

  Deposit accounts

  Kapol Bank accepted customer deposits through ordinary co-operative banking accounts. These deposits formed part of the bank’s funding base and included the balances later considered under the DICGC insurance and liquidation process.

• Lending

  Loans and advances

  Lending was a core banking activity for the institution. RBI restrictions from 2017 limited the granting of new loans without prior approval, materially reducing the bank’s ability to conduct normal credit operations.

• Trade finance

  Letters of credit

  The bank handled letters of credit and related trade-finance activity. Forged-letter-of-credit cases involving directors and a former officer later became associated with allegations of significant financial irregularities.

• 2023

  Financial irregularities and regulatory failure

  The bank faced allegations of financial irregularities and fraud alongside inadequate capital, poor earning prospects and failures to meet regulatory requirements. The RBI subsequently cancelled its licence and the institution entered liquidation.

  Source

• 2019

  Former officer linked to letters-of-credit scam

  Former bank officer Jayanta Dimbeshwar Das was arrested in connection with an alleged ₹15 crore letters-of-credit scam.

  Source

• 2013

  Alleged forged letters-of-credit diversion

  Director Hiren Mehta was arrested in a case alleging that he helped three businessmen divert ₹14.5 crore through forged letters of credit.

  Source

Read more

• 2023

  Banking licence cancellationOther

  Background

  The RBI concluded that Kapol Bank lacked adequate capital, had poor earning prospects, failed to comply with applicable requirements and could not repay depositors in full.

  Action taken

  The RBI cancelled the bank’s banking licence on 25 September 2023.

  Aftermath

  The bank ceased authorized banking operations and was placed into liquidation by the Central Registrar of Cooperative Societies.

  Source

• 2023

  Liquidation and depositor resolutionOther

  Background

  Following licence cancellation, the institution required formal winding-down and administration of depositor claims.

  Action taken

  The Central Registrar ordered liquidation and appointed Shardul S. Jadhav as liquidator.

  Aftermath

  Asset recovery, legal proceedings and depositor claims continued, with the liquidator’s term later extended to November 2025.

  DICGC disbursements. ₹230.16 crore disbursed to 96.09% of depositors (By July 2023)

  Source

• 2021

  Potential merger with Cosmos Co-operative BankM&A

  Background

  Kapol Bank’s financial and governance difficulties prompted consideration of a combination with another co-operative bank.

  Action taken

  Kapol Bank consented to a potential merger with Cosmos Co-operative Bank.

  Aftermath

  The bank nevertheless lost its licence and entered liquidation in 2023; the reference material states that the RBI approved the merger in January 2025.

  Source

• 2017

  RBI restricts withdrawals and new businessOther

  Background

  The RBI imposed directions after concerns about Kapol Bank’s financial condition and ability to operate safely.

  Action taken

  Withdrawals were limited to ₹3,000 per account, and new loans and deposits required prior regulatory approval.

  Aftermath

  The restrictions were repeatedly extended through 2021 and 2022, constraining the bank’s operations until its licence was cancelled.

  Source

• 2024

  Kapol Bank removed from RBI’s Second Schedule[1]Kapol Co-operative Banken.wikipedia.org

  Regulation

  The RBI excluded Kapol Bank from the Second Schedule to the Reserve Bank of India Act, 1934, following the loss of its banking licence and liquidation.

• 2023

  RBI cancels Kapol Cooperative Bank’s licence[1]Kapol Co-operative Banken.wikipedia.org

  Regulation · Bankruptcy

  The RBI cancelled the bank’s licence on 25 September 2023, citing inadequate capital, poor earning prospects, statutory non-compliance and the inability to repay depositors in full.

• 2023

  Kapol Bank placed into liquidation[1]Kapol Co-operative Banken.wikipedia.org

  Bankruptcy · Leadership change

  The Central Registrar of Cooperative Societies ordered liquidation on 8 November 2023 and appointed Shardul S. Jadhav as liquidator.

• 2023

  Deposit insurance payments reported for Kapol Bank depositors[1]Kapol Co-operative Banken.wikipedia.org

  Regulation · Other

  The DICGC reportedly disbursed ₹230.16 crore to 96.09% of depositors, covering insured deposits up to ₹5 lakh.

• 2021

  Restrictions on Kapol Bank repeatedly extended[1]Kapol Co-operative Banken.wikipedia.org

  Regulation

  Regulatory restrictions remained in force after multiple extensions, reflecting continuing concerns about the bank’s financial and operational condition.

• 2021

  Kapol Bank consents to possible Cosmos Bank merger[1]Kapol Co-operative Banken.wikipedia.org

  M&A

  Kapol Bank agreed in principle to a potential merger with Cosmos Co-operative Bank as it faced continuing financial and governance challenges.

• 2017

  RBI imposes restrictions on Kapol Co-operative Bank[1]Kapol Co-operative Banken.wikipedia.org

  Regulation

  The Reserve Bank of India imposed restrictions under Section 35A of the Banking Regulation Act, including a withdrawal limit of ₹3,000 per account and controls on new lending and deposit-taking.

1. 1Kapol Co-operative Banken.wikipedia.org
2. 2Kapol Cooperative Bank official websitekapolbank.com