Raj HC bars credit societies from accepting deposits without

The Rajasthan High Court today prohibited credit cooperative societies in the state from accepting deposits from people without taking licence from the Reserve Bank of India.
The societies will have to take RBI licences within three months.
The division bench headed by Chief Justice Sunil Ambwani gave these orders while hearing a PIL filed by Sajjan Singh Bhati, who had raised suspicion on the credibility of the societies in terms of the deposits taken from the non-members.
His counsel S P Sharma argued in the court that these societies have been taking huge deposits by promising them huge returns.
"This money is at huge stake as these societies are not accountable to RBI," he argued.

Admitting these arguments, the court observed that these societies are carrying out banking activities without any permission from RBI.

The court also considered the ATM installations by these societies as a banking activity.
In its order, the bench said that "the societies' directors will have to return all the deposited amount to the depositors as per rules.
"There will not be any restriction on it but they will not be allowed to accept any deposits without any licence from the RBI."
The court also gave some directions to the state government expressing doubts on the functioning of the societies, which are registered under Rajasthan Societies Act.