Banking licence requirement for cooperative societies receiving deposits applies even when funds are taken from members and nominal members.

A cooperative society registered under the Rajasthan Cooperative Societies Act, 2001 or a multi-state cooperative society under the Multi-State Cooperative Societies Act, 2002 cannot accept deposits or carry on banking activity without a licence under the Banking Regulation Act, 1949. Activities involving receipt of deposits for lending or investment, repayable on demand or otherwise, fall within the statutory definition of banking, and the term "public" includes nominal and other members where deposits are solicited without meaningful restriction. Authority under cooperative law or bye-laws does not exempt such societies from the banking licensing regime. The Court restrained the respondent societies from undertaking banking activities without the requisite licence and directed strict enforcement by State authorities.

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Issues: Whether a cooperative society registered under the Rajasthan Cooperative Societies Act, 2001 or a multi-state cooperative society registered under the Multi-State Cooperative Societies Act, 2002 can accept deposits and otherwise carry on banking activity without obtaining a licence under the Banking Regulation Act, 1949.

Analysis: The activities of accepting deposits for lending or investment, with repayment on demand or otherwise, fall within the statutory definition of banking. The expression "public" in that definition is not confined to outsiders alone and includes nominal members and other members where deposits are solicited without meaningful restriction. The fact that the societies are otherwise authorized to function under their bye-laws or under cooperative enactments does not exempt them from the licensing regime governing banking business. The protection of depositors requires compliance with the licensing and regulatory framework of the Banking Regulation Act, 1949.

Conclusion: The societies cannot carry on banking activity or accept deposits from the public, including nominal members and ordinary members, without a licence under the Banking Regulation Act, 1949.

Final Conclusion: The writ petition succeeded to the extent that the Court restrained the respondent societies from undertaking banking activities without the requisite banking licence and directed strict enforcement of that restraint by the State authorities.

Ratio Decidendi: A cooperative society's authority under cooperative legislation does not permit it to accept deposits from members or the public in a manner amounting to banking unless it first obtains a licence under the Banking Regulation Act, 1949.

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