Mumbai, July 7, 2026: Depositors of the liquidated City Co-operative Bank who had more than Rs 5 lakh in their accounts have begun receiving an additional 15% of their outstanding dues, bringing fresh relief to hundreds of investors who have been fighting to recover their money for years.
The details were revealed in a press release issued by the Mumbai Grahak Panchayat on Tuesday.
Additional Payout Begins
The release said the latest payout is separate from the deposit insurance amount of up to Rs 5 lakh that was released earlier. Around Rs 20 crore is expected to be distributed among the affected depositors, according to the Mumbai Grahak Panchayat. The bank's liquidator began crediting the additional amount to depositors' accounts last week.
The bank was headed by former Union minister Anandrao Adsul. The Reserve Bank of India had placed restrictions on the bank in 2018 after alleged financial irregularities came to light.
According to the Mumbai Grahak Panchayat, the bank management was given opportunities to recover loans that had allegedly been advanced in violation of banking norms. However, after its financial position failed to improve, the RBI ordered the bank's liquidation in June 2024.
Depositors had earlier received up to Rs 5 lakh each under the Deposit Insurance and Credit Guarantee Corporation (DICGC) mechanism in 2022. However, the release said that investors whose deposits exceeded the insurance ceiling were left with substantial amounts still locked in the failed bank.
Legal Efforts Continue
The affected investors later formed the City Investors Foundation and began pursuing legal and administrative remedies to recover the balance.
According to the Mumbai Grahak Panchayat, City Investors Foundation President Subhash Sabnis, 82, and Secretary Ajay Panse, 73, examined the bank's remaining assets and recoverable dues before repeatedly taking up the matter with the cooperation authorities.
Their sustained follow-up, carried out with the guidance of the consumer organisation, eventually resulted in depositors with claims exceeding Rs 5 lakh becoming eligible for the additional 15% payout.
Panse said the Commissioner for Cooperation had extended support during the process.
The depositors are simultaneously pursuing legal proceedings for recovery of the remaining amounts.
Consumer Case Before NCDRC
The Mumbai Grahak Panchayat has filed a complaint before the National Consumer Disputes Redressal Commission (NCDRC) in New Delhi on behalf of 312 depositors whose deposits exceeded Rs 5 lakh.
The proceedings seek recovery of nearly Rs 40 crore in deposits, apart from interest and compensation, from the bank's directors.
Advocate Shirish Deshpande filed the complaint after obtaining permission from the Commissioner for Cooperation under the cooperative law. The National Consumer Disputes Redressal Commission has admitted the complaint and issued notices to the bank through its liquidator and to the RBI, the press note said.
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The Mumbai Grahak Panchayat said the latest recovery was an unusual development for depositors of a failed bank, as they were receiving money beyond the statutory deposit insurance cover.
“Such a payout could possibly be among the first of its kind in the history of failed banks,” the press release said.
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