- The Reserve Bank of India (RBI) made a significant move on Wednesday by canceling the license of a bank due to concerns over its capital and earning potential.
- The bank in question is the Ahmedabad-based Color Merchants Co-operative Bank.
- According to the RBI, continuing operations would pose a risk to depositors in the future, as the bank currently lacks the ability to fully repay its depositors.
- This has understandably left many customers anxious about the fate of their savings.
- So, what does this mean for the customers’ money?
The Reserve Bank of India (RBI) made a significant move on Wednesday by canceling the license of a bank due to concerns over its capital and earning potential. The bank in question is the Ahmedabad-based Color Merchants Co-operative Bank. According to the RBI, continuing operations would pose a risk to depositors in the future, as the bank currently lacks the ability to fully repay its depositors. This has understandably left many customers anxious about the fate of their savings.
So, what does this mean for the customers’ money? In a statement, the RBI mentioned that they have asked the Registrar of Cooperative Societies in Gujarat to take steps to close the bank and appoint a liquidator. Under the rules, every depositor is entitled to receive an insurance claim of up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
The RBI also noted that, based on the cooperative bank’s submitted data, around 98.51% of depositors should be able to recover the full amount of their deposits from the DICGC. As of March 31, 2024, the DICGC has already disbursed Rs 13.94 crore from the total insured deposits, based on requests from the bank’s depositors.
Regarding the license cancellation, the RBI explained that the bank’s lack of adequate capital and earning prospects, along with its failure to meet certain requirements under the Banking Regulation Act, were key factors. They emphasized that allowing the bank to continue operating would not be in the public’s best interest. Following the license cancellation, the cooperative bank will cease all banking activities at the close of business on Wednesday, April 16, 2025, which includes accepting deposits and other banking services.