The RBI has cautioned the public against cooperative societies that claim to be banks and accept deposits from non-members.
In a statement, the regulator said that after the amendment in 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 RBI.
The RBI said it has come to its notice that some cooperative societies are using the word ‘bank’ in their names in violation of the Banking Regulation Act and are also accepting deposits from non-members, nominal members, and 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 license under the BR Act, 1949, nor are they authorized by the RBI to do banking business. The insurance cover from the Deposit Insurance and Credit Guarantee Corporation (DICGC) is also not available for deposits placed with these societies,” the RBI said.
The central bank has advised the public to exercise caution and carry out due diligence on such cooperative societies and look for a banking license issued by the RBI before dealing with them.