RBI has warned co-operative societies against utilizing the term bank in their namesReserve Bank of India (RBI) has cautioned people versus co-operative societies which are utilizing the word bank in their titles and accepting deposits from non-members.
In an alert, the reserve bank stated on Monday that publish the modification in the Banking Guideline Act, 1949, which became effective from September 29, 2020, co-operative societies can not use the words bank , lender or banking as part of their names, other than as allowed under the provisions or by the RBI.It has concerned observe that some co-operative societies are utilizing the word bank in their names in violation of the Banking Regulation Act.
It has actually also concerned the notification of RBI that some cooperative societies are accepting deposits from non-members, small members, associate members which is tantamount to carrying out banking business in infraction of the provisions, the declaration said.
Members of the general public are hereby notified that such societies have actually neither been released any licence under Banking Policy Act, 1949 nor are they authorised by the RBI for doing banking company, RBI said further in the statement.In addition to this, the insurance cover from Deposit Insurance and Credit Assurance Corporation (DICGC) is also not available for deposits put with these societies, the reserve bank added.In this light, members of the public are recommended to exercise caution and perform due diligence of such co-operative societies if they claim to be a bank, and search for banking license issued by RBI before dealing with them, it recommended.