RBI Cancels Licence of Colour Merchants Co-operative Bank in Ahmedabad, What will happen to Customer’s Money?
On April 15, 2025, the Reserve Bank of India (RBI) cancelled the banking licence of Colour Merchants Co-operative Bank Ltd., which is located in Ahmedabad, Gujarat. This means the bank will stop all banking operations from the end of the business day on April 16, 2025. The RBI has also asked the Registrar of Cooperative Societies, Gujarat, to begin the process of closing down (winding up) the bank and to appoint a liquidator who will manage the bank’s closure and handle payments to depositors.
Why was the bank’s licence cancelled?
The RBI took this serious step due to several major issues with the bank:
- Poor financial health: The bank did not have enough capital (money) and had no hope of earning profits in the near future.
- Not following rules: The bank failed to meet the important legal requirements laid down in the Banking Regulation Act, 1949, especially under Sections 11(1), 22(3)(a) to 22(3)(e), and Section 56 (which applies to cooperative banks).
- Risk to depositors: The RBI felt that keeping the bank running would harm the interest of depositors, as the bank is not in a position to return people’s money in full.
- Public interest at stake: If the bank continued its operations in such a condition, it would have negatively affected the general public and the trust in the banking system.
What happens now?
With its licence cancelled, Colour Merchants Co-operative Bank can no longer accept or return money from customers. In simple terms, the bank is now prohibited from doing any kind of banking work like accepting deposits or giving out money.
What about the customers’ money?
There is good news for depositors. Customers of this bank will get their money back up to ₹5 lakh (₹5,00,000) through Deposit Insurance and Credit Guarantee Corporation (DICGC). This is part of a government-backed insurance scheme that protects small depositors in case banks fail.
According to the bank’s own data:
- 98.51% of depositors will get their full money back under the ₹5 lakh limit.
- As of March 31, 2024, DICGC has already paid ₹13.94 crore to depositors who had shared their willingness to claim their insured amount.
What depositors should do?
If you have an account with this bank, you don’t need to panic. Your money (up to ₹5 lakh) is insured. You will need to follow the process shared by the liquidator and DICGC to get your refund. The liquidator will now take over and help with the settlement of claims.
