The RBI on Monday cautioned the public against cooperative societies using 'bank' in their names as well as accepting deposits from people who are not their members.
After the amendment to the Banking Regulation Act, 1949, effective September 29, 2020, cooperative societies cannot use the words 'bank', 'banker' or 'banking' as part of their names, except as permitted under the provisions or by the Reserve Bank of India (RBI).
In a statement, the RBI said it has come to notice that some cooperative societies are using the word 'bank' in their names in violation of the Banking Regulation Act.
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.
The public is advised to exercise caution and carry out due diligence of such cooperative societies if they claim to be a bank, and look for banking licence issued by RBI before dealing with them, the central bank said.
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