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RBI rejects Kerala's plea to review ban on calling co-op societies as 'banks'

RBI rejects Keralas plea to review ban on calling co-op societies as banks

Thiruvananthapuram: Union Finance Minister Nirmala Sitharaman on Monday informed the Lok Sabha that the Reserve Bank of India (RBI) has rejected Kerala's plea to review the ban on terming co-operative societies as 'banks.'

The statement from the finance minister comes amid Kerala Government's move to secure primary societies in the cooperative sector from stringent guidelines of the RBI.

The minister backed that the RBI's notice cautioning general public regarding the unlicensed and unauthorised activities of certain cooperative societies was in exercise of its powers and duties provided under the Banking Regulation Act.

Quoting the RBI, the minister said some cooperative societies using the word "bank" in their names and accepting deposits from non-members/nominal members/ associate members was tantamount to conducting banking business without obtaining a banking licence from RBI.

In its directive issued last month, the RBI had barred co-operative societies from using the term banks and restrained them from taking deposits from those who do not have voting rights. It also asked co-operative societies not to use locker facilities and other banking norms.

The minister said the RBI had received a letter from the Registrar of Cooperative Societies, Kerala, and another from the minister of cooperation and registration seeking withdrawal of the caution notice.

Howeber, the RBI has informed that the notice was part of its duty and was in no way against the functioning of cooperative societies.

The minister's statement was in reply to a question by Sougata Ray.

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TAGS:Reserve bank of indiaco-operative societyBanks
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