Money Deposited in Co-Operative Bank is Not Safe

Money deposited in co-operative bank is not safe now if we see the stats of recent RBI license cancellation of several co-operative banks in India. The reason behind it, although Co-operative banks are regulated by RBI though cooperative banks are becoming victims of poor corporate governance or political leaders. Co-operative banks often lure customers to get deposit money and open new savings accounts and fixed deposits accounts by offering them slightly higher interest rates compared to commercial and national banks. And this little higher interest rate attracts common man to deposit their hard earned money in co-operative banks. Else we do not see any major facility provided by co-operative banks if we compare to other commercial banks.

Every single year it has been a common trend of co-operative banks license cancellation due to violation of RBI policies. But still people are not awakening and they are losing their money by depositing in cooperating banks. We are not saying that all cooperative banks are bad but at least the reputation of cooperative banks is not good in India in recent years. Big corporate giants and top political leaders somehow find the ground to control the cooperative bank’s top management and they start taking unfair advantage of it.

Why Co-Operative Bank is Not Safe

Recently RBI has canceled the license of several cooperative banks. And some of the cooperative banks whose license was canceled by the RBI are as follows…

• Rupee Co-operative Bank Ltd, Pune
• Solapur-based Laxmi Co-operative Bank
• Mumbai-Based CKP Co-operative Bank
• Nashik’s Independence Co-operative Bank
• Karnala Nagari Sahakari Bank
• Deccan Urban Co-operative Bank Ltd.

The list is longer if we check the RBI press release every year. In larger public interest, the Modi Government has created regulation to insure cooperative bank’s depositors money up to ₹ 5,00,000 (Rupees Five Lakhs) including interest. Means for any reason if RBI cancels license of any cooperative bank then in this situation depositors will be able to get their money bank up to ₹ 5,00,000. But beyond this deposit limit there’s no guarantee if a depositor will get the money back or not. 

So suppose you have a savings or fixed deposit account with any cooperative bank for up to ₹ 10,00,000 and in an unforeseen situation RBI cancels the license of that cooperative bank then you will only be able to get up to ₹ 5,00,000 only as your safe deposit. For the rest of the amount you are on your luck.

Now, the question is although it is in public and everyone knows about this then why do people deposit money in cooperative banks? The main reason behind this is higher interest rates offered by the cooperative banks and minimal documentation compared to any other commercial banks.

Now is the time when the government should tighten regulations in providing banking licenses easily to corporate giants and political leaders in public interest. Else after getting banking license corporate giants and leaders start using the bank’s facility to serve their own private interest.

Money Deposited in Co-Operative Banks Are Not Safe. FAQs

Conclusion

Although it is legal to deposit money in cooperative banks, cooperative banks are legal banks. Then still we would recommend you to deposit your money in any commercial and government bank only. Since commercial and government banks such as State Bank of India, Punjab National Bank, Central Banks and other such banks are safe banks and your money will remain safe in these banks. So don’t risk your hard earned money by putting in cooperative banks, no matter what luring offer and higher interest rates they offer.

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