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The Abhyudaya Co-operative Bank Ltd. began in 1964 as the Abhyudaya Co-operative Credit Society Ltd., founded by social workers and labor activists in Mumbai to serve the financial needs of the urban working class and economically weaker sections, particularly mill workers and industrial laborers. Starting with a modest capital of ₹5,000, the institution quickly transitioned to an Urban Co-operative Bank, officially establishing itself as a full-fledged banking entity in June 1965 with the motto "Prosperity through Co-operation." A key regulatory milestone occurred in September 1988 when the Reserve Bank of India (RBI) conferred Scheduled bank status upon it, a designation that solidified its position within the national financial framework. By January 2007, the bank was registered as a multi-state co-operative bank, enabling its expansion beyond its primary base in Maharashtra into states like Gujarat and Karnataka, often through the acquisition of smaller co-operative banks.

Currently, the institution remains a multi-state urban Co-operative banking institution, not a public or private limited company in the conventional sense, as it is owned and operated on a co-operative principle by its members. Historically, Abhyudaya has held significance as one of the larger urban co-operative banks in India, a category of banks crucial for promoting financial inclusion and providing accessible services to local communities and smaller businesses. Its significance is tied to its role in the co-operative banking sector, although in more recent years, the bank has faced regulatory scrutiny, including the supersession of its board by the RBI in November 2023 due to governance deficiencies. Despite such challenges, the bank continues to operate and reports serving customers primarily across Maharashtra, Gujarat, and Karnataka.