In a decisive move, the Reserve Bank of India (RBI) has revoked the license of Color Merchants Cooperative Bank, located in Ahmedabad. This action was taken due to the bank’s inability to maintain sufficient capital and its failure to generate future income. The RBI concluded that allowing the bank to continue operations would be against the interest of its depositors and the general public.
Color Merchants Cooperative Bank License Cancellation
| Point of Information | Details |
|---|---|
| Bank Name | Color Merchants Cooperative Bank, Ahmedabad |
| Action Taken | License cancelled by RBI |
| Reason | Lack of capital and future income potential |
| Effective Date | April 16, 2025 |
| Insurance Coverage | ₹5 lakh per depositor by DICGC |
| Percentage of Fully Covered Deposits | 98.51% |
| Amount Paid to Depositors (Till Mar 2024) | ₹13.94 crore |
| Future of the Bank | To be liquidated as per RBI and Registrar orders |
Why Did RBI Cancel the Bank’s License?
The RBI reported that the bank failed to comply with the Banking Regulation Act, lacked capital adequacy, and showed no scope for financial recovery. This combination of issues triggered the RBI’s decision to permanently shut down the bank. In parallel, the Registrar of Gujarat Cooperative Societies has been advised to initiate the liquidation process, ending the bank’s operations officially.
Depositors’ Safety: DICGC Insurance Comes into Play
The big question for account holders is: What happens to our money? Fortunately, depositors are insured up to ₹5 lakh under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme. RBI confirmed that 98.51% of customers will get their full deposit amount. As of March 31, 2024, over ₹13.94 crore has already been disbursed to depositors by DICGC.
End of Operations: Effective April 16, 2025
The cancellation of the license is effective from the end of business hours on April 16, 2025. From that point forward, the bank can no longer accept deposits or repay existing ones. All financial operations of the bank have ceased, and it has effectively stopped functioning as a financial institution.
What Should Depositors Learn from This?
This case serves as a strong warning to depositors. Before putting money into any cooperative or small bank, verify its RBI compliance and ensure it falls under DICGC insurance coverage. Chasing high interest rates from financially weak banks can be risky. Experts recommend choosing nationalized or reputed private banks for better financial safety.
FAQs
Due to poor capital adequacy, zero profit potential, and regulatory non-compliance.
No, depositors are insured up to ₹5 lakh under the DICGC scheme.
The bank will cease operations after April 16, 2025.
DICGC provides insurance up to ₹5 lakh per depositor in case of bank failure.
Ensure it is RBI compliant and DICGC-insured, and avoid banks offering unusually high interest rates.