RBI Cautions against Some Cooperative Societies Using 'Bank' in Their Names
Moneylife Digital Team 22 November 2021
In a major announcement, the Reserve Bank of India  (RBI) on Monday said that cooperative societies are not allowed to use 'bank' in their names and also cautioned them against accepting deposits from people who are not their members. RBI noted that some cooperative societies are accepting deposits from non-members/ nominal members which tantamounts to conducting banking business in violation of the provisions of the Banking Rergulation Act, 1949.
 
In a statement, RBI said it has come to notice that some cooperative societies are using the term 'bank' in their names, which is a violation of the Bank Regulation Act. Notably, after the amendment in the Banking Regulation Act, 1949, effective September 29, 2020, cooperative societies are not allowed to use the words 'bank', 'banker' or 'banking' as part of their names, except as permitted under the provisions or by RBI.
 
"It has come to the notice of RBI that some Cooperative Societies are using the word 'Bank' in their names in violation of Section 7 of the Banking Regulation Act, 1949 (As Applicable to Cooperative Societies) (the BR Act, 1949). It has also come to the notice of RBI that some Cooperative societies are accepting deposits from non-members/ nominal members/ associate members which tantamount to conducting banking business in violation of the provisions of the BR Act, 1949," a statement from the RBI read.
 
The central bank further warned the public that such societies have not been given any licence under BR Act, 1949 and they are not authorised by it for doing banking business.
 
"Members of the public are hereby informed that such societies have neither been issued any licence under BR Act, 1949 nor are they authorized by the RBI for doing banking business. 
 
"The insurance cover from Deposit Insurance and Credit Guarantee Corporation (DICGC) is also not available for deposits placed with these societies. Members of public are advised to exercise caution and carry out due diligence of such Cooperative societies if they claim to be a bank, and look for banking license issued by RBI before dealing with them," the statement from RBI added.
 
Comments
tapanksur
2 months ago
we are really gr8, one chance we get to break rules of a game, we will do it, because of vested interest. We do not see any exempleray punishment for financial wilful cheating on any institution or people, leading us to believe, while we are a democracy & vote our representatives so that they always take care of our interest, they fail us!
singhalpar100
2 months ago
Why no action is taken against such cooperative societies ? It is known fact that many of them are selling Crypto also and giving loan against them.
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