Mumbai
Taking a major step, the Reserve Bank of India (RBI) has canceled the banking license of Color Merchants Co-operative Bank in Ahmedabad. This decision has been taken at a time when the bank’s financial condition was severely weakened and had neither enough capital, nor any possibility of staying in future.
Why the bank was closed?
According to the RBI, the Bank failed to follow several necessary provisions of the Banking Regulation Act. Apart from this, due to continuous losses and weak financial health, this institution was not able to ensure the security of its customers’ deposit. In view of these conditions, the Reserve Bank has also recommended the Registrar of the Gujarat Co-operative Society to close the bank and appoint a liquidator for it.
How much money will the customers get?
There is no need to panic- RBI has made it clear that 98.51% of the bank’s customers are eligible for insurance claims on their deposit under Deposit Insurance and Credit Guarantee Corporation (DICGC). According to the rules of DICGC, each depositor will get a payment of deposit of up to ₹ 5 lakh. By 31 March, 2024, DICGC has already paid an amount of about ₹ 13.94 crore to the customers.
Now banking services closed
With the cancellation of the license on April 16, 2025, the banking business of Color Merchants Co-operative Bank has completely stopped. This means that now the bank will not accept any kind of deposit nor will you be able to repay old deposits.
What is the way forward?
The RBI believes that continuing the operation of the bank in the current condition will be against the interests of the customers. Therefore, the closure of the bank was the only option. Now the bank’s properties will be settled under the supervision of the liquidator and the amount will be ensured to the customers through DICGC.
