The Reserve Bank of India warned the public on Monday against co-operative societies using the word "bank" in their names or accepting deposits from persons who are not members. Co-operative societies cannot use the words "bank," "banker," or "banking" in their names when the modification to the Banking Regulation Act, 1949 takes effect on September 29, 2020, unless otherwise approved by the regulations of the Reserve Bank of India (RBI).
The cooperative societies using the word bank in their names is a violation of the Banking Regulation Act, said RBI in a statement.
Furthermore, the Reserve Bank of India has also discovered that some cooperative societies are accepting deposits from non-members, nominal members, and associate members, which amounts to conducting banking operations in contravention of the regulations.
The RBI stated, "Members of the public are hereby advised that such societies have not been awarded any licence under the BR Act, 1949, nor have they been licensed by the RBI to conduct banking operations."