Mumbai, Nov 22 (IANS): The Reserve Bank of India (RBI) has cautioned cooperative societies against the use of the word 'Bank' in their names as it is not only in violation of the provisions of Banking Regulation Act but also misleads the general public about the nature of operations of cooperatives.

As per the Banking Regulation (Amendment) Act, 2020, co-operative societies cannot use the words "bank", "banker" or "banking" as part of their names, except as permitted under the provisions of Act, or by the RBI.

The RBI has also cautioned the general public to exercise caution and carry out due diligence of such Co-operative societies if they claim to be a bank, and look for banking licenses issued by RBI before dealing with them.

It said that the insurance cover from Deposit Insurance and Credit Guarantee Corporation (DICGC) is also not available for deposits placed with societies not authorized to function as banks. This would mean that in the event of failure of such Cooperatives, the public may end up losing all their hard earned money put into deposits with such entities.

The fresh RBI action follows reports 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.

"Members of the public are hereby informed that such societies have neither been issued any licence under BR Act, 1949 nor are they authorized by the RBI for doing banking business," the RBI said in a statement.