After over seven months, the Reserve Bank of India (RBI) has given the beleaguered District Central Cooperative Banks (DCCBs) the green signal to exchange their deposits in old currency notes. The remittance, however, will be restricted only to deposits the banks had received between November 10-14.
The 31 DCCBs in Maharashtra, like their counterparts across the country, had faced severe restrictions from the RBI soon after the central government announced, on November 8, its decision to withdraw Rs 500 and Rs 1,000 currency notes. These banks were barred from accepting as well as exchanging old notes from November 14, with the RBI citing the non-compliance of KYC norms for account holders as the reason. Between November 10 and 14, these banks had seen more than Rs 2,000 crore in deposits, which the RBI had refused to remit, citing non-sanitised KYC accounts.
While hearing a plea by the DCCBs, the Supreme Court had allowed the remittance of old currency notes, but asked for KYC compliance of the accounts. Subsequently, NABARD had conducted four verifications of the bank accounts. Last week, the central government had given the green signal for the exchange of old notes, but RBI had not issued any directions about that.
The deep rural penetration of DCCBs makes them invaluable for securing rural credit. The seven-month limbo had hampered the disposal of both rabi and kharif crop loans. Till June end, only Rs 5,707.42 crore in crop loans had been disbursed by these banks; they had disbursed as much as Rs 10,451.77 crore worth of kharif crop loan last year.
Banks had cited liquidity crunch and mounting losses as the reason behind their failure to disburse loans. The cumulative losses to the bank, due to non-remittance of old currency notes, is estimated to be Rs 300 crore.
However, the RBI’s green signal has come with a rider, and the DCCBs will not be able to exchange old notes deposited before November 10.
Narendra Darade, chairman of the Nashik DCCB, said the bank has Rs 25 crore from the pre-demonetisation period. “What are we going to do with that money? It was deposited with the bank as part of usual transactions,” he said.
The Pune DCCB had tried to deposit Rs 25 crore just before the note ban, but the currency chest banks had written to them about their lack of space and refused to accept the same. Ramesh Thorat, chairman of the Pune DCCB, said the bank will furnish the written refusal to the RBI. However, Thorat said the RBI has specified only certain branches for remittance and that would mean further logistical trouble for the banks.