Kerala govt to take legal aid as RBI disallows referring Co-op societies as 'banks'


File picture | Photo: AFP

Thiruvananthapuram: Kerala Cooperation Minister V.N. Vasavan will reach Delhi on Wednesday to meet legal experts after the Reserve Bank of India rejected the state's plea to allow Cooperative Societies to use the word 'bank'.

A close aide of Vasavan said the Kerala government is left with no other option, but to take up the issue legally.

"Ever since the RBI came out with clear cut guidelines to this effect, Kerala has been trying its best to plead its case with the central bank. Vasavan had earlier this month written to RBI Governor Shaktikanta Das seeking withdrawal of 'Caution Notice' published by the central bank last month in several Malayalam dailies over various cooperative societies using the word "bank" in their names, said the aide who did not wished to be identified.

"Incidentally, Union Finance Minister Nirmala Sitharaman, the other day informed the Lok Sabha that the RBI has rejected the plea of the Kerala government and hence there is no other way but to take it up legally," added the aide.

The notice of the RBI had directed Cooperative Societies not to use the words, "bank", "banker", or "banking" as part of their names except as permitted under the provisions of the Banking Regulation Act 1949, or by the RBI.

It also noted that cooperative Societies are accepting deposits from non-members/nominal members/associate members, in violation of the provision of the Act 1949, and that insurance cover under the Deposit Insurance and Credit Guarantee Corporation is not available to the deposits of Cooperative Societies.

The Kerala government had expressed deep concern over the RBI notice and Chief Minister Pinarayi Vijayan, recently attacked the Centre's high-handedness towards states and had slammed the authorities for trying to create confusion in the Cooperative Sector in the state and said the Centre should desist from such moves.

One reason why Vasavan is rushing to Delhi is the Cooperative sector in Kerala especially the banking segment is very strong and has a huge deposit base and is the succour to the local populace, when it comes to getting quick loans against collateral security, as compared to getting loans from commercial banks. (IANS)

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