On Wednesday, the Reserve Bank of India (RBI) revoked the license of Color Merchants Co-operative Bank in Ahmedabad.
The RBI stated that the bank was unable to maintain sufficient capital and had no future earnings potential.
Additionally, the bank failed to meet important regulations under the Banking Regulation Act, prompting the cancellation of its license.
The RBI also directed the Registrar of Gujarat Co-operative Society to close the bank and appoint a liquidator.
What Happens to Customers’ Money?
Depositors will be able to claim up to Rs 5 lakh of their money from the Deposit Insurance and Credit Guarantee Corporation (DICGC) once the bank is liquidated.
According to the RBI, nearly 98.51% of the bank’s customers will receive the full amount of their deposits.
As of March 31, 2024, the DICGC has already paid Rs 13.94 crore to affected customers.
Bank’s Operations End
The RBI highlighted that allowing the bank to continue operating would have been detrimental to its customers, as the bank was in poor financial condition and could not repay its obligations.
As a result, Color Merchants Co-operative Bank ceased all banking activities on April 16, 2025. This means it will no longer accept deposits or process withdrawals.
The bank would not be able to repay its customers fully, and allowing it to operate further would cause more harm
