District central cooperative banks writes to RBI, objects to rider

RBI had refused to exchange the old currency notes deposited with DCCBs till November 14, saying that these banks had failed to carry out 100 per cent KYC verification of its accounts.

By: Express News Service | Pune | Updated: July 2, 2017 5:27 am

A DAY after the Reserve Bank of India (RBI) allowed the district central cooperative banks (DCCBs) to exchange old currency notes, the Pune DCCB has written to the RBI objecting to one of the riders for the exchange. The rider in question related to the RBI’s decision to accept notes deposited with the banks between November 10-14 and its refusal to accept old currency notes with the banks before that.

Last November, the central government had withdrawn Rs 500 and Rs 1,000 currency notes from circulation as part of its demonetisation process. The DCCBs had faced multiple sanctions from the RBI. These predominantly rural banks were barred from either exchanging or depositing old currency notes after November 14. The RBI had refused to exchange the old currency notes deposited with them till November 14.

RBI had said these banks had failed to carry out 100 per cent KYC verification of its accounts. In Maharashtra, the 31 DCCBs had seen deposits of over Rs 2,000 crore with Pune DCCB recording the highest deposit of Rs 600 crore.

DCCBs had moved the Supreme Court, which had asked the RBI to exchange the notes after 100 per cent KYC verification of the accounts. RBI had asked NABARD to conduct the verification and till June 4 such verification were carried out. While the central government had sanctioned the exchange of the notes, the RBI had issued the notification only on Friday. The refusal of RBI to accept pre-November 8 deposits has added to the troubles of the banks.

The Pune DCCB in its letter to the RBI has stated that till November 8, the bank had more than Rs 149 crore in now withdrawn currency notes. This entire amount was eligible to be deposited with the currency chest and the banks had taken it to the same who had expressed inability to accept the currency due to lack of space. Currency chests had further refused to accept the old currency notes after the RBI had issued a circular on November 17 restraining them form doing so.

In its letter, the bank stated that 100 per cent of its lending was in the priority sector and refusal of the RBI to remit deposits prior to November 8 was an injustice to the sector. Citing the Supreme Court’s observation in this regard, the banks has asked the RBI to amend its order and allow for deposit of all old currency notes with them.

Ramesh Thorat, chairman of the Pune DCCB, said he would discuss the issue with former Union agriculture minister Sharad Pawar.

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