The Reserve Bank of India (RBI), in an advisory to the members of the public, said co-operative societies have neither been issued any licence under Banking Regulation (BR) Act, 1949 nor are they authorised 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.
Forbidden word
Simultaneously, RBI asked 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 noticed 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).
“It has also come to the notice of RBI 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,” the Central bank said.