In Kerala, cooperative banks shut down

The multi-level cooperative banking network which is facing a crisis after the RBI banned district cooperative banks from exchanging scrapped notes.

Written by Shaju Philip | Thiruvananthapuram | Updated: November 17, 2016 3:05 am
Demonetisation, gujarat cooperative banks, rs 500 ban, rs 1000 ban, dccb, indian express news, india news When demonetisation was announced last week, the cooperative banks were allowed to accept the scrapped notes as deposits from account holders who meet KYC norms.

Kerala’s cooperative banking sector remained shut Wednesday in protest against what it called a bid to weaken the sector under guise of demonetisation.

The multi-level cooperative banking network, which has Rs 52,000 crore in deposits, is facing a crisis after the RBI banned district cooperative banks from exchanging scrapped notes. The cooperative banks are not allowed to collect the Rs 500 and Rs 1,000 notes from customers in exchange of valid currency.

Kerala Minister A C Moitheen said the Centre’s stand would spell trouble for the sector. He said the state would approach the RBI again, and expects it to change its stand.

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When demonetisation was announced last week, the cooperative banks were allowed to accept the scrapped notes as deposits from account holders who meet KYC norms. But the RBI cancelled the permission a few days later on the ground that the cooperative banks would help launder black money. A few cooperative banks had allowed opening of fresh accounts for the purpose of depositing demonetised notes.

The issue has got a political angle with BJP alleging that the CPM and Congress have stashed black money with cooperative banks, which are ubiquitous in CPM strongholds in Kannur.

“We are not against cooperative banks. We are opposing parking of black money in cooperative banks,’’ said BJP state president Kummanam Rajasekharan.