The Reserve Bank of India has cancelled the banking licence of Colour Merchants Co-operative Bank Ltd., Ahmedabad, Gujarat. As a result, the bank will cease to carry on banking operations from the close of business on April 16, 2025.
The Registrar of Co-operative Societies, Gujarat has also been requested to issue an order for the winding up of the bank and to appoint a liquidator.
According to data provided by the bank, about 98.51% of the depositors are eligible to receive the full amount of their deposits from DICGC. As of March 31, 2024, DICGC has already disbursed Rs 13.94 crore of insured deposits to eligible depositors under Section 18A of the DICGC Act, based on the consent received from them.
The RBI stated that the licence has been cancelled because the bank does not have adequate capital and earning prospects. It also does not comply with the provisions of Section 11(1) and Section 22(3)(d) read with Section 56 of the Banking Regulation Act, 1949.
Further, the bank has failed to meet the requirements of Sections 22(3)(a) to 22(3)(e) of the same Act. The central bank added that continuing the operations of the bank would be prejudicial to the interests of its depositors, and that the bank is not in a position to repay its existing depositors in full.
In light of these circumstances, the RBI concluded that public interest would be adversely affected if the bank were allowed to continue its operations.
Following the cancellation of its licence, Colour Merchants Co-operative Bank Ltd. is now prohibited from conducting banking business, including accepting deposits and making repayments, as defined under Section 5(b) read with Section 56 of the Banking Regulation Act, 1949.
Upon liquidation, each depositor will be entitled to receive an insurance claim up to Rs 5,00,000 (Rupees five lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC), as per the DICGC Act, 1961.
It is worth noting that recently only the RBI cancelled the license of Shankarrao Mohite Patil Sahakari Bank Ltd., Akluj in Kolhapur district of Maharashtra. Following this, the bank was prohibited from conducting any banking operations, including accepting and repaying deposits.
In case of Shankarrao Mohite Patil Sahakari Bank as of March 31, 2025, the Deposit Insurance and Credit Guarantee Corporation (DICGC) has already disbursed Rs 47.89 crore to eligible depositors under the provisions of Section 18A of the DICGC Act, 1961, based on claims and willingness submitted by the concerned depositors.
