The Reserve Bank of India (RBI) has cancelled the licence of Ahmedabad-based ‘Color Merchants Co-operative Bank’ as it does not have sufficient capital and earning prospects. The Reserve Bank of India said in the statement that the Registrar of Gujarat Cooperative Societies has also been requested to issue an order to close the bank and appoint a liquidator for the bank. On liquidation, every depositor will be entitled to receive insurance claim amount on his deposits up to a monetary limit of Rs 5 lakh only from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

The Reserve Bank further said that as per the data submitted by the cooperative bank, about 98.51 per cent of the depositors are entitled to receive the full amount of their deposits from the DICGC. As of March 31, 2024, the DICGC has already paid Rs 13.94 crore to the depositors of the bank.

The bank failed on every front

Giving reasons behind cancelling the license, the Reserve Bank said that the bank does not have sufficient capital and earning prospects. The cooperative bank has also failed to comply with certain requirements under the Banking Regulation Act.

The Reserve Bank said, “The continuation of the bank is detrimental to the interests of the depositors. With its current financial position, the bank will be unable to make full payments to its depositors.” The Reserve Bank also said that if the bank is allowed to continue its banking business further, it will adversely affect the public interest.

Following the cancellation of the licence, the cooperative bank will cease to carry on the banking business from the close of business on Wednesday (April 16, 2025). Banking business includes, among other things, accepting deposits and repayment of deposits.

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