The Reserve Bank of India (RBI), through an order dated April 15, 2025, has cancelled the banking licence of Colour Merchants Co-operative Bank Ltd., Ahmedabad, Gujarat. As a result, the bank will cease all banking operations from the close of business on April 16, 2025. The Registrar of Co-operative Societies, Gujarat, has also been requested to issue an order for the bank’s winding up and to appoint a liquidator.

The licence has been cancelled due to the following reasons:

The bank lacks adequate capital and has no viable earning prospects, making it non-compliant with Sections 11(1) and 22(3)(d), read with Section 56 of the Banking Regulation Act, 1949.

The bank has failed to meet the conditions laid out in Sections 22(3)(a), 22(3)(b), 22(3)(c), 22(3)(d), and 22(3)(e) of the Act, read with Section 56.

Its continued operation is deemed detrimental to the interests of depositors.

Given its current financial position, the bank is incapable of repaying its depositors in full.

Allowing the bank to continue its operations would not be in the public interest.

Following the licence cancellation, Colour Merchants Co-operative Bank Ltd. is prohibited from engaging in any banking activities with immediate effect. This includes the acceptance and repayment of deposits, as defined under Section 5(b), read with Section 56 of the Banking Regulation Act, 1949.

Upon liquidation, each depositor is entitled to receive up to ?5,00,000 (Rupees five lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC), in accordance with the DICGC Act, 1961. Based on the bank’s submitted data, approximately 98.51% of depositors are eligible to receive the full amount of their deposits under this insurance coverage. As of March 31, 2024, DICGC has already disbursed ?13.94 crore towards insured deposits under Section 18A of the DICGC Act, 1961, based on the consent received from the concerned depositors.