The 31 district central cooperative banks (DCCBs) in Maharashtra are starting at a cumulative loss of Rs 300 crore, due to the delay by the Reserve Bank of India (RBI) in accepting old currency notes deposited with them. The Pune DCCB alone has suffered a loss of Rs 20 crore, because of the excess interest they have had to pay to depositors from November.
Known for their intensive rural network, the DCCBs were put on severe restrictions by the RBI three days after the central government announced withdrawal of Rs 500 and Rs 1,000 currency notes. These banks were debarred from either depositing or exchanging the old currency notes.
The reserve bank said the restrictions were put as the DCCBs had not followed the Know Your Customer (KYC) norms for all their account holders.
At the end of the three-day period, the DCCBs together held Rs 2743.48 crore in old currency notes.
The RBI’s restrictions were challenged by these banks in the apex court, which allowed exchange of the old notes after 100 per cent KYC verification of accounts. The RBI then directed NABARD to carry out the verification, and five rounds were conducted for the purpose.
The Centre, a few days ago, gave the green signal for the exchange of the notes, but the banks are yet to receive the official directive from the RBI.
The RBI has to send out intimations to individual banks about currency chests from where they can get their old notes changed. Sixteen of the 31 DCCBs have old notes with them.
Saddled with these non-functional currency notes, the financial health of the DCCBs has gone for a toss, with 11 banks severely affected. Other than the loss of business, the banks have to pay interest to their depositors. The cumulative interest which the banks have to pay is around Rs 300 crore, which is a direct loss to them.
Ramesh Thorat, chairman of the Pune DCCB, said they are paying around Rs 20 crore in excess interest. The amount for the Nashik DCCB, said Chairman Narendra Darade, is Rs 15 crore. Thorat said the payment of extra interest is entirely due to the delay by the RBI in allowing them to exchange the old notes.
“We are going to demand that the RBI pay us this interest,” he said.