According to the apex body, several cooperative societies are accepting deposits from consumers in the name of the banking business, violating the provisions of the Act.
“It has come to the notice of Reserve Bank of India (RBI) that some co-operative Societies are using the word “Bank” in their names. This is a violation of Section 7 of the Banking Regulation Act, 1949…,” said the central bank.
Further, the bank said that such societies have neither been issued any licence under the Act nor are they authorised by the RBI for conducting any banking business.
“The insurance cover from Deposit Insurance and Credit Guarantee Corporation (DICGC) is also not available for deposits placed with these societies,” RBI said.
In addition to this, the central bank has advised the public to be careful while carrying out due diligence of such cooperative societies before dealing with them.