RBI: The Reserve Bank of India (RBI) on Wednesday canceled the license of Color Merchants Cooperative Bank in Ahmedabad. The RBI said that the Color Merchants Cooperative Bank does not have enough capital and there is no possibility of earning. Apart from this, the Bank has also failed to follow some important rules under the Banking Regulation Act, due to which this big step has been taken.
The Reserve Bank said in a statement that it has been requested to issue an order to close the bank and appoint a liquidator for the bank.
98.51 percent customers will get full money
On liquidation, each depositor will be entitled to the deposit insurance and loan guarantee corporation (DICGC) to receive an insurance claim amount to a monetary limit of only Rs 5 lakh on its deposits. The Reserve Bank further said that according to the data presented by the cooperative bank, about 98.51 percent of the customers are eligible to receive the entire amount of their deposit from DICGC. By March 31, 2024, DICGC has already distributed Rs 13.94 crore to the bank customers.
Color Merchants Co-operative Bank stopped its banking business
The Reserve Bank has said that “Color merchants co-operative bank continuing operating is harmful to its customers’ interests. Due to the current financial situation, the bank will not be able to return the full amount to its customers.” The RBI has said that if the bank is allowed to continue the banking business, it will adversely affect the customers. After the cancellation of the license, the cooperative bank will stop the banking business on Wednesday (April 16, 2025) after the closure of the business. Banking businesses include depositing cash and repayment of deposit, among other things.
What will happen to customers’ money?
According to a press release by the Reserve Bank, the registrar of cooperative societies in Gujarat has been directed to issue an order regarding the closure of the bank and the appointment of administrator. Now, according to the rules of DICGC, depositors can claim insurance coverage on deposits up to Rs 5 lakh.
According to the data provided by the cooperative bank, about 98.51 percent deposits can receive their entire amount from DICGC. As of 31 March 2024, DICGC has paid Rs 13.94 crore from the insurance deposit as per the will of the depositors associated with the bank.
The RBI had said the reason for the cancellation of the banking license of the Color Merchants Cooperative Bank, the banks had said the lack of adequate cash and the bank’s lack of profit. The Bank Cooperative Bank failed to follow certain conditions of the Banking Act. If the RBI had allowed the bank to continue its banking operations, it would have adversely affected the public interest. Therefore, due to the cancellation of the license, the operation of color merchants cooperative bank will be closed from today.
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