The word bank cannot be used in the name of co-operative societies: RBI

Impact of the Banking Regulation Act in 2020

Co-operative societies cannot accept deposits from the public, these deposits are not even covered by insurance.

MUMBAI: The Reserve Bank of India (RBI) has advised the public to be wary of co-operative societies that use the word 'bank' in front of their names and accept deposits from their members.

Following the amendments to the Banking Regulation Act, 1949, which came into force on 29 September 2020, co-operative societies may not use bank, banker or banking in their name, unless permitted by the Reserve Bank of India.

In violation of the provisions of the Banking Regulation Act, some co-operative societies have been found to be using the word 'bank' in their names, the RBI said in a statement. It has also been noticed that some societies are accepting deposits from the public. Accepting deposits is tantamount to doing banking business, which is tantamount to violating the provisions of the Act.

Such societies have not been given any license under the BR Act, 1949 and have not been given any authority to conduct banking business, which is being noted by the public, the RBI further said in a statement. Deposits in such societies are not covered by the Deposit Insurance and Credit Guarantee Corporation.