The Bank of the Reserve said Wednesday that he canceled the license of the ‘Cooperative Bank of Color Merchants’ based in Ahmedabad, since the lender has no proper capital and profit prospects.
The Cooperative Societies Registrar, Gujarat, has also requested that an order to settle the bank and appoint a liquidator for the bank, said the Bank of the Reserve of India (RBI) in a statement.
In the liquidation, each deposit would have the right to receive the amount of the deposit insurance claim of its deposits to a monetary ceiling of RS 5 Lakh only by the Corporation of Insurance and Credit Guarantee of Deposits (DICGC).
RBI also said, according to the data presented by the Cooperative Bank, around 98.51 percent of the depositors have the right to receive the total amount of their DICGC deposits.
As of March 31, 2024, DICGC has already paid RS 13.94 million rupees of the total insured deposits based on the provision received from the depositors in the bank.
Giving reasons behind the cancellation of the license, RBI said that the bank has no proper profit and profit prospects.
The Cooperative Bank has not met certain requirements under the Banking Regulation Law.
“The continuation of the bank is preliminary to the interests of the depositors. The bank with its current financial position could not pay its current depositors in its entirety,” said the RBI.
RBI also said that the public interest would be affected if the bank can continue its banking business.
After the cancellation of the license, the Cooperative Bank stops continuing with banking businesses with effect from the closing of the business on Wednesday (April 16, 2025).
The banking business includes, among other things, the acceptance of deposits and reimbursement of deposits.