Co-operative societies can’t use the word “Bank” in their names, RBI cautions the general public
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- Last Updated on 24 November, 2021
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Press release dated 22-11-2021
RBI has cautioned about Cooperative societies using the word “bank” in their names and for accepting deposits from non-members. RBI said that Cooperative societies can’t use the words “bank”, “banker” or “banking” as part of their names, except as permitted under the provisions of the Banking Regulations Act, 1949 or by the RBI. It also informed that Co-operative societies have neither been issued any license under Banking Regulations Act, 1949 nor are they authorized by the RBI for doing banking business.
According to Section 7 of the Banking Regulation Act, 1949, RBI noticed that some co-operative 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 cooperative societies are accepting deposits from non-members, nominal members, associate members which is equivalent to conducting banking business in violation of the prescribed provisions.
Cooperative societies are formed to promote the economic interests of their members. It can maintain accounts and accept deposits from its members only and not from non-members.
Additionally, insurance cover from Deposit Insurance and Credit Guarantee Corporation (DICGC) is also not available for deposits placed with these societies.
RBI quoted that “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
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