RBI cautions against use of 'bank' in the names of co-operative societies

The Reserve Bank of India (RBI) on Thursday warned against use of the word 'bank' in some cooperative societies. It a statement, the central bank said, "Co-operative societies cannot use the words “bank", "banker" or "banking" as part of their names, except as permitted under the provisions of BR Act, 1949 or by RBI."

RBI also noted that some such cooperative societies are even accepting deposits from non-members without any licensing or approval from the central bank.

The RBI warned the public that such societies neither possess any licence under Banking Regulation Act, nor have they authorised by the RBI for carrying out banking business.

“The insurance cover from Deposit Insurance and Credit Guarantee Corporation (DICGC) is also not available for deposits placed with these societies. Members of public are advised to exercise caution and carry out due diligence of such cooperative societies if they claim to be a bank, and look for banking license issued by RBI before dealing with them," RBI noted.

DICGC is a wholly-owned subsidiary of the Reserve Bank of India (RBI). It provides deposit insurance that works as a protection cover for bank deposit holders when the bank fails to pay its depositors.

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