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RBI Withdraws Corrective Action Plan on Religare Finvest and Cancels Licence of Karwar Urban Co-op Bank in Major July 2025 Decisions.

Banking & Finance | Dated: 26 Jul 2025

On July 23, 2025, the Reserve Bank of India (RBI) made two major regulatory announcements — first, it officially withdrew the Corrective Action Plan (CAP) imposed on Religare Finvest Limited (RFL), a wholly-owned subsidiary of Religare Enterprises Limited (REL), and second, it cancelled the banking licence of The Karwar Urban Co-operative Bank (UCB), Karnataka, due to non-compliance with capital and viability norms.

🎯 Key Highlights:

  • - The CAP on Religare Finvest Limited was originally imposed on January 18, 2018, due to regulatory irregularities detected during an inspection as of March 31, 2017. These included large-scale fund misappropriations and non-compliance with financial norms.
  • - At the time, the NBFC had accumulated losses amounting to ₹2,270 crore till March 2022. Despite the recent withdrawal of the CAP, RFL is still obligated to adhere to all applicable prudential regulations.
  • - Significant recovery measures were undertaken by the NBFC, including a one-time settlement with 16 lenders in March 2023. Through this settlement, RFL repaid nearly ₹9,000 crore to the banking system, which played a pivotal role in RBI’s decision to remove the CAP restrictions. This financial restructuring marked a turning point in the company’s compliance track record.

💡 Other Important Facts:

  • (i) In early 2025, the Burman family acquired a controlling stake in Religare Enterprises Limited (REL) through an open offer. This strategic acquisition effectively made the Burmans the promoters of REL, giving them a 25.16% shareholding. Their entry is expected to stabilize RFL’s operations and governance structure in the long term.
  • (ii) In a separate development, the RBI cancelled the banking licence of The Karwar Urban Co-operative Bank (UCB), Karnataka, due to insufficient capital adequacy and weak earning prospects. This action was taken in accordance with Section 11(1) and Section 22(3)(d) of the Banking Regulation Act, 1949. The cancellation took effect on July 23, 2025, and the bank is prohibited from conducting any further banking activities.
  • (iii) The RBI has requested the Registrar of Cooperative Societies (RoCS), Karnataka, to initiate the winding-up process and appoint a liquidator. Depositors of Karwar UCB are eligible for insurance compensation up to ₹5 lakh under the Deposit Insurance and Credit Guarantee Corporation (DICGC). This move ensures financial protection for small depositors and upholds the integrity of the cooperative banking sector.

📚 Test Your Knowledge:

Which financial institution recently had the Corrective Action Plan (CAP) withdrawn by the Reserve Bank of India (RBI)?

Correct Answer: Religare Finvest Limited (RFL)

🚀 Quick Recap:

About Religare Enterprises Limited (REL)

  • Interim Chairperson : Praveen Kumar Tripathi
  • Headquarters: New Delhi