Mumbai, 22 Nov : .The Reserve Bank of India (RBI), has warned cooperative societies not to use the term ‘Bank’ as their name.
This is in contravention of Banking Regulation Act and misleads members about the operations of cooperatives. Co-operative societies can’t use “bank”, banker, or banking as part of the names of themselves, except where permitted by Act or the RBI.
Also, the RBI cautioned that people should be cautious and do their due diligence about Co-operative Societies claiming to be banks.Before dealing with these organizations, make sure to check for RBI banking licenses.
The insurance coverage from Deposit Insurance and Credit Guarantee Corporation is not available to deposits made with non-banking societies.The public could lose all the money they have saved by depositing with these Cooperatives in case of bankruptcy.
This is the second RBI decision.It follows reports from Co-operative Societies that they are taking deposits from members/nominal members/associate member, which amounts to banking business under the provisions of the BR Act 1949.
The RBI stated in a statement that “Members are hereby advised that such societies are not issued any license under BR Act 1949 or authorized by RBI to conduct banking business.”
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