Co-op societies can’t use ‘bank’ in their names: RBI

The RBI on Monday cautioned the general public towards co-operative societies utilizing ‘financial institution’ of their names in addition to accepting deposits from people who find themselves not their members.

After the modification within the Banking Regulation Act, 1949, efficient September 29, 2020, co-operative societies can’t use the phrases “bank”, “banker” or “banking” as a part of their names, besides as permitted underneath the provisions or by the Reserve Bank of India (RBI).

In a press release, RBI mentioned it has come to note that some cooperative societies are utilizing the phrase ‘financial institution’ of their names in violation of the Banking Regulation Act.

It has additionally come to the discover of RBI that some co-operative societies are accepting deposits from non-members/ nominal members/ affiliate members which is tantamount to conducting banking enterprise 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 mentioned.

Further, the insurance coverage cowl from Deposit Insurance and Credit Guarantee Corporation (DICGC) can be not out there for deposits positioned with these societies.

Members of the general public are suggested to train warning and perform due diligence of such co-operative societies in the event that they declare to be a financial institution, and search for banking license issued by RBI earlier than coping with them, the central financial institution mentioned. 

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