The Reserve Bank said on Wednesday it had cancelled its license for Ahmedabad-based “Color Merchant Cooperative Bank” because lenders lacked proper capital and did not attract potential customers.
The Registrar of Gujarat Cooperatives has also been requested to issue an order to hoist the bank and appoint a liquidator for the bank, the Reserve Bank of India (RBI) said in a statement.
By liquidation, all depositors are entitled to a deposit insurance amount of up to a monetary ceiling of Rs 5 from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
The RBI further stated that, according to data submitted by the Cooperative Bank, about 98.51% of depositors are entitled to receive the full deposit from the DICGC.
As of March 31, 2024, DICGC has already paid Rs 13.94 of total insurance deposits based on their willingness received from the bank’s related depositors.
Stateing the reasons behind the cancellation of the license, RBI said the banks do not have sufficient capital and prospects for acquisition.
Cooperative banks were also unable to comply with certain requirements under the Banking Regulation Act.
“The continuation of the bank is harmful to the interests of the depositors. A bank with current financial position will not be able to pay the current depositors in full,” the RBI said.
The RBI also said that public interest would be adversely affected if banks are allowed to continue their banking operations.
Following the cancellation of the license, Cooperative Bank will no longer be performing its banking operations on Wednesday (April 16, 2025) from the end of the business.
Banking includes, among other things, accepting deposits and repayment of deposits.
