The Reserve Bank of India (RBI) on November 22 cautioned about co-operative societies using the word 'Bank' in their names and accepting deposits from non-members.
"It has come to the notice of RBI that some Co-operative Societies are using the word “Bank” in their names in violation of Section 7 of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies) (the BR Act, 1949)," the RBI said.
Further, it has also come to the notice of the RBI that some co-operative societies are accepting deposits from non-members/ nominal members/ associate members which is tantamount to conducting banking business in violation of the provisions of the BR Act, 1949, the central bank said.
"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," the RBI said.
"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 licence issued by the RBI before dealing with them," the central bank said.
According to an Act amendment which came into force on 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 of BR Act, 1949, or by the RBI, the central bank said.
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