Even if Cashaa’s Unicas does not claim to be a bank, should the path taken by Gaurav to offer loans for cryptocurrency sound the alarm?

“Since United is a cooperative society and not a bank, the RBI has no regulatory or supervisory power over the institution,” said NS Vishwanathan, former deputy governor of the RBI.

“Cooperative societies which are not authorized to carry out banking activities grant loans and advances to their members on deposits collected from their members,” he said. “Here, the risk of default, unlike banks, is shared by its members, who are not depositors in the sense that they are understood in the case of banks.

Multistate Cooperative Societies are managed by the Central Registrar of Cooperative Societies under the Multistate Cooperative Societies Act.

In addition, a cooperative society is not permitted to issue checks, provide interbank cash withdrawal facilities, issue debit and credit cards payable at another bank, trade forex, or take out cash. clearing house services, said R Gandhi. , former deputy governor of RBI.

“It’s (United) a credit society, it can lend money to its members for their own purposes, whether it’s to buy a car, start a business, or buy crypto tokens,” he said. declared. “But Unicas branches should make it clear that it is a multi-state cooperative society, so that members can take advantage of its services, keeping this in mind.”

In accordance with Article 56 of the Law on Banking Regulation, no cooperative society other than a cooperative bank may use in its name or in the course of its activities any of the words “bank”, “banker” or ” Bank ” .

A primary credit company is required to convert to a primary cooperative bank if its released share capital and reserves exceed the threshold of Rs 1 lakh, under section 56 of the Banking Regulation Act, Gandhi said.

But the same rule does not apply to multi-state cooperative societies.

“The RBI recognizes the loophole and called on the government to harmonize these rules, so that multi-state cooperative companies are forced to convert to banks beyond a certain threshold, in order to avoid systemic risk.” , did he declare.

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