- The Reserve Bank of India (RBI), in an advisory to the members of the public, said co-operative societies have neither been issued any license under Banking Regulation (BR) Act, 1949 nor are they authorized for doing banking business.
- Further, insurance cover from the Deposit Insurance and Credit Guarantee Corporation (DICGC) is also not available for deposits placed with these societies.
- 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 licence issued by RBI before dealing with them,” the central bank said in a statement.
- Also RBI has advised co-operative societies to desist from using the words “bank”, “banker” or “banking” as a part of their names, except as permitted under the provisions of BR Act, 1949 or by the Central bank.
- RBI has observed that some co-operative societies are using the word “Bank” in their names in violation of Section 7 of the BR Act, 1949 (As Applicable to Co-operative Societies) (the BR Act, 1949).
RBI also adds that some co-operative societies are accepting deposits from non-members/ nominal members/ associate members which tantamount to conducting banking business in violation of the provisions of the BR Act, 1949.