With the government’s decision to allow district central cooperative banks (DCCBs) to deposit the banned Rs 500 and Rs 1,000 notes with the Reserve Bank of India till July 20, the DCCBs in Maharashtra sitting on Rs 5,200 crore of old demonetised currency will now be in a position to lend afresh to the farm sector. The decision has provided relief to the DCCBs in the state which were under pressure to disburse crop loans to farmers.
“The total amount of junked notes across 31 DCCBs works to Rs 5,200 crore,” an official in the department of cooperation and marketing told The Indian Express. The money has been lying idle with the DCCBs since November 8, the day demonetisation of old Rs 500 and 1,000 notes was announced.
The Centre’s decision to allow DCCBs to replace its junked notes comes in wake of shortage of cash, compounded by the huge farm loan waiver by Maharashtra government. The total loan waiver is estimated to be around Rs 30,000 crore.
On Wednesday, Fadnavis said, “I am thankful to the Government of India and the Reserve Bank for the decision to allow deposit of junked notes in district cooperative banks. This will provide huge relief to the farmers in Maharashtra in getting loans from DCCBs.”
An official at one of the DCCBs, requesting anonymity said, “The replacement of entire amount by the RBI would help to enhance the crop credit flow to larger number of farmers.” However, officials said that in last seven months, they had to bear the 4 to 6 per cent interest rate on the junked amount. It almost worked to Rs 200 crore which has cut into the overall profit of the DCCBs.
Across rural Maharashtra, 31 DCCBs have 3,770 branches. However, 14 are in financial stress with low liquidity.
Shortly after the demonetisation decision last year, RBI had banned deposits of demonetised notes in DCCBs. The reports indicated that cash flow post-demonetisation within three days had increased substantially. Thus, pointing towards sizeable unaccounted money finding its way in these banks.