RBI cautions against various Co-operative societies using word “Bank” in their names
The RBI has cautioned general public against various Co-operative societies using word “Bank” in their names.
According to RBI, in terms of the Banking Regulation Act, 1949 (BR Act, 1949) which was amended by the Banking Regulation (Amendment) Act, 2020 w.e.f. September 29, 2020, co-operative societies cannot use the words “bank”, “banker” or “banking” as part of their names, except as permitted.
According to RBI, it has noted that some Co-operative Societies are using the word “Bank” in their names in violation of Section 7 of the Banking Regulation Act, 1949.
Not only this, RBI has also taken note of that some Co-operative 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.
Public has been accordingly cautioned 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 Co-operative societies if they claim to be a bank, and look for banking license issued by RBI before dealing with them.
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