THIRUVANANTHAPURAM: The Reserve Bank of India once again made it clear that cooperative societies should not use “bank” in their names. In a notification given in vernacular dailies on Thursday, the RBI said it has not given licence to these societies to undertake banking business.
In a statement the RBI said that it has come to the notice that some co-operative societies and primary co-operative credit societies are accepting deposits from non-members, nominal members, and associate members. Members of the public are hereby informed that such co-operative societies have neither been issued any licence under Banking Regulation Act, 1949 (as applicable to cooperative societies) nor are they authorized by the RBI for undertaking banking business. The insurance cover from deposit insurance and credit guarantee corporation is not available for these cooperative societies, the RBI said.
While responding to the RBI directive, cooperation minister V N Vasavan said the RBI had come out with such a directive earlier as well and the state government had approached the Centre and the RBI against it. However, there was no favourable response from them. “Though we are using the name “bank”, the cooperative societies in the state are not accepting deposits from non-members and are also not providing loans to non-members. The RBI stipulation is that we should not receive deposits from the non-members which we are maintaining,” he said.
However, he said in the wake of the new notification from the RBI, the state government will examine what can be done. There are instances in the past where the state government had approached the court against such a directive and had received temporary stay on the RBI order, the minister added.
The RBI notification will be applicable for the 1,625 cooperative societies in the state. In 2021, the state government had approached the RBI seeking its nod to use the term “cooperative bank” for primary cooperative societies. The RBI, however, took the decision that as per the central bank guidelines and the banking regulation amendment Act passed in the parliament, cooperative societies cannot use the term “cooperative bank”. tnn
