The Reserve Bank of India (RBI) has cautioned members of the public not to deal with co-operative societies undertaking banking business by adding ‘bank’ to their names.
“The Banking Regulation Act, 1949 was amended by the Banking Regulation (Amendment) Act, 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 RBI,” the RBI said.
It has also come to the notice of 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.
“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 said.
Further, the insurance cover from Deposit Insurance and Credit Guarantee Corporation (DICGC) is also not available for deposits placed with these societies.
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 license issued by RBI before dealing with them, the Central bank said.
(With PTI inputs)