Context
The Reserve Bank of India has noted that some cooperative societies are using the word ‘bank’ in their names, in contravention of Banking Regulation Act. Some cooperative societies are even accepting deposits from non-members without any licensing or approval from the central bank.
In light of these developments, the RBI clarified that cooperative societies are not allowed to use “bank", “banker" or “banking" in their names.
Analysis
Understanding the ‘banking’ structure of India
Reserve Bank of India is the central bank of the country and regulates the banking system of India.
The structure of the banking system of India can be broadly divided into following categories:
Banks can also be classified on the basis of Scheduled and Non-Scheduled Banks. Scheduled Banks
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Why co-operatives cannot use the term ‘bank’?
Central Bank of India
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What they “cannot” do?
The insurance cover from Deposit Insurance and Credit Guarantee Corporation (DICGC) is also not available for deposits placed with these societies.
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Verifying, please be patient.