The Reserve Bank of India on 22nd November 2021 has cautioned the public against co-operative societies using ‘bank’ in their names as well as accepting deposits from people who are not their members.
The Banking Regulation Act, 1949 (BR Act, 1949) was amended by the Banking Regulation (Amendment) Act, 2020 (Act 39 of 2020) which came into force on September 29, 2020. Accordingly, 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 Reserve Bank of India (RBI).
However It has come to the notice of RBI that some Co-operative Societies are using the word “Bank” in their names and accepting deposits from non-members/ nominal members/ associate members which tantamount to conducting banking business in violation of the provisions of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies) (the BR Act, 1949).
Therefore 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 Co-operative societies if they claim to be a bank, and look for banking license issued by RBI before dealing with them.
