On Wednesday, the Reserve Bank of India (RBI) canceled the license of Ahmedabad’s Color Merchants Co-operative Bank. According to the RBI, the bank lacked sufficient capital and had no earning prospects.
In addition to this, the bank failed to comply with several essential regulations under the Banking Regulation Act. As a result, this major action had to be taken.
The RBI also mentioned that it had requested the Registrar of Gujarat Co-operative Society to issue an order to close the bank and appoint a liquidator.
What Happens to Customers’ Money?
When the bank is liquidated, depositors will be eligible to claim up to Rs 5 lakh of their deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
The RBI stated that based on the data submitted by the bank, about 98.51% of its customers will 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 bank’s customers.
Banking Operations Cease
The RBI further emphasized that the continuation of the bank’s operations would be harmful to its customers due to its poor financial health.
The bank would not be able to fully repay its customers, and allowing it to continue operating would negatively affect them.
With the cancellation of the license, Color Merchants Co-operative Bank ceased its banking business on Wednesday, April 16, 2025. This means the bank will no longer conduct activities such as accepting deposits or repaying funds.