On Monday, the RBI warned the public against cooperative organisations using ‘bank’ in their titles and receiving deposits from people who are not their members.
After the reformation in the Banking Regulation Act, 1949, effective September 29, 2020, co-operative organisations are disabled from using the words “bank”, “banker”, or “banking” as part of their names, except as authorised under the stipulations or by the Reserve Bank of India (RBI).
RBI stated it has been noticing that few co-operative societies are utilising the word ‘bank’ in their names in infringement of the Banking Regulation Act. It has also come to the warning of RBI that certain co-operative societies accept deposits from non-members/ nominal members/ associate members, which is equivalent to leading banking business in infringement of the stipulations.
“Members of the public are hereby informed that such societies have neither been issued any licence under BR Act, 1949 nor are they authorised by the RBI for doing banking business,” RBI saidd. Further, the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance cover is unavailable for deposits placed within these societies.
Public members are encouraged to be cautious and carry enough attention to such cooperative societies if they pretend to be a bank. The central bank said they should look for banking licenses published by RBI before dealing with them.