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Strictness: RBI Says Cooperative Societies Should Not Use The Word Bank

Business Desk, Amar Ujala, New Delhi

Published by: Kuldeep Singh
Updated Tue, 23 Nov 2021 03:01 AM IST

Summary

The Reserve Bank said in a warning issued on Monday, after the amendment in the Banking Regulation Act 1949, the Banking Regulation Act 2020 has come into effect from September 29, 2020. Despite this, there have been complaints about the use of the word bank in the names of many cooperative societies. These co-operative societies are violating section 7 of the Banking Regulation Act, 1949.

reserve Bank of India
– Photo : Social Media

The Reserve Bank issued a warning to co-operative societies saying that they cannot use the words bank, banker or banking in their names. At the same time, they also do not have the right to deposit money from non-members or customers and action can be taken against them for doing so.

No right to deposit money from customers
The Reserve Bank said in a warning issued on Monday, after the amendment in the Banking Regulation Act 1949, the Banking Regulation Act 2020 has come into effect from September 29, 2020. Despite this, there have been complaints about the use of the word bank in the names of many cooperative societies. These co-operative societies are violating section 7 of the Banking Regulation Act, 1949.

Not only this, some co-operative societies are also depositing money from non-members or common customers, which is a breach in the business of banks and also a clear violation of banking rules. These committees have never been permitted by the RBI to carry on the business of the bank.

In this, the Deposit Insurance and Credit Guarantee Corporation does not provide insurance on deposits up to Rs 5 lakh. This means that the depositors’ money here is completely unsecured. While alerting such customers also, RBI has said that they should withdraw their money as soon as possible.

Expansion

The Reserve Bank issued a warning to co-operative societies saying that they cannot use the words bank, banker or banking in their names. At the same time, they also do not have the right to deposit money from non-members or customers and action can be taken against them for doing so.

No right to deposit money from customers

The Reserve Bank said in a warning issued on Monday, after the amendment in the Banking Regulation Act 1949, the Banking Regulation Act 2020 has come into effect from September 29, 2020. Despite this, there have been complaints about the use of the word bank in the names of many cooperative societies. These co-operative societies are violating section 7 of the Banking Regulation Act, 1949.

Not only this, some co-operative societies are also depositing money from non-members or common customers, which is a breach in the business of banks and also a clear violation of banking rules. These committees have never been permitted by the RBI to carry on the business of the bank.

In this, the Deposit Insurance and Credit Guarantee Corporation does not provide insurance on deposits up to Rs 5 lakh. This means that the depositors’ money here is completely unsecured. While alerting such customers also, RBI has said that they should withdraw their money as soon as possible.

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