RBI has cancelled the licence of Ahmedabad-based ‘Colour Merchants Co-operative Bank’ as the lender does not have adequate capital and earning prospects.
Registrar of Cooperative Societies, Gujarat, has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank, the Reserve Bank of India (RBI) said in a statement.
On liquidation, every depositor would be entitled to receive the deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5 lakh only from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
RBI further said as per the data submitted by the co-operative bank, about 98.51 per cent of the depositors are entitled to receive the full amount of their deposits from DICGC.
As of March 31, 2024, DICGC has already paid Rs 13.94 crore of the total insured deposits based on the willingness received from the concerned depositors of the bank.
Giving reasons behind cancellation of the licence, RBI said the bank does not have adequate capital and earning prospects.
The cooperative bank has also failed to comply with certain requirements under the Banking Regulation Act.
according to RBI,”The continuance of the bank is prejudicial to the interest of the depositors. The bank with its present financial position would be unable to pay its present depositors in full”.And RBI also said that public interest would be adversely affected if the bank is allowed to carry on its banking business any further.