RBI Cautions Co-operative Societies Against Using Term "Bank"
RBI has cautioned co-operative societies against using the term "bank" in their names
Reserve Bank of India (RBI) has cautioned people against co-operative societies which are using the word "bank" in their titles and accepting deposits from non-members.
In a notification, the central bank said on Monday that post the amendment in the Banking Regulation Act, 1949, which became effective from September 29, 2020, co-operative societies cannot use the words "bank", "banker" or "banking" as part of their names, except as permitted under the provisions or by the RBI.It has come to notice that some co-operative societies are using the word "bank" in their names in violation of the Banking Regulation Act. It has also come to the notice of RBI that some cooperative societies are accepting deposits from non-members, nominal members, associate members which is tantamount to conducting banking business in violation of the provisions, the statement said.
"Members of the public are hereby informed that such societies have neither been issued any licence under Banking Regulation Act, 1949 nor are they authorised by the RBI for doing banking business," RBI said further in the statement.
In addition to this, the insurance cover from Deposit Insurance and Credit Guarantee Corporation (DICGC) is also not available for deposits placed with these societies, the central bank added.
In this light, members of the public are advised to exercise caution and carry out due diligence of such co-operative societies if they claim to be a bank, and look for banking license issued by RBI before dealing with them, it suggested.