The Reserve Bank reiterated that cooperatives and societies should not use the word bank with their names. The RBI has warned such groups not to accept investments from non-members. Clarified. Punjab and Maharashtra Corporate Bank (PMC) scam: RBI A similar proposal was issued. But even after that, the new proposal came after it was noticed that co-operatives and societies were misleading the people and seizing investments. The RBI has said that some co-operatives have noticed the use of the term ‘bank’ in their name, which is a violation of the Banking Regulation Act. Said in a statement. Such groups and societies were given time to adapt to RBI rules. As part of this, the Banking Regulation Act of 1949 was amended. The new law, which came into force on September 29, 2020, restricts co-operatives from using the words ‘bank’, ‘banker’ or ‘banking’ as part of their names. RBI It is permitted only for such approved institutions. The use of such terms with names is a violation of Section 7 of the Banking Regulation Act, 1949 (applicable to Co-operative Societies) (BR Act). In addition, the RBI has noticed that some co-operative societies accept deposits from non-members / nominal members / associate members. Clarified. 1949 B.R. The Central Bank warned that such societies were not licensed under the Act and were not authorized to do banking business. Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance coverage is also not available for investments in such groups and societies. Also Read: RBI warns people to be cautious in dealing with such institutions The bottom line is that investments made in violation of the warning will not receive any protection. Past history has shown that some of these mushroom-bursting institutions have only the life of a bubble. At the same time, the RBI There are co-operative societies and societies in the country which are licensed to operate as per the guidelines. Such institutions can provide all the services provided by the bank. The investment will also be covered. Therefore, it is better to look for a license and invest regardless of the name bank. Prior to the deposits, the RBI There is nothing wrong with asking to see the license. That is your right.