Opposition parties in the state are raising their voice against the blanket ban on allowing deposit of demonetised notes in the district central cooperative banks (DCCBs), calling it a step towards “dismantling the sector leading to its merger with nationalised banks”.
Though the state BJP chiefs of Maharashtra and Gujarat have raised concerns over the inconvenience caused to farmers because of the Reserve Bank of India’s decision to disallow deposit of old Rs 1000 and Rs 500 notes in the cooperative banks, the Centre has not taken any decision to relax the guidelines.
Speaking to The Indian Express, former cooperative and markets minister Harshvardhan Patil of the Congress said, “The argument that RBI decision was to check the black money in district central cooperative banks is irrational. There is a larger gameplan to demolish the cooperative sector, which has dominance of the opposition parties wherever the network is strong.”
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Referring to Maharashtra, Patil said, “The decision has inconvenienced nearly 75 lakh farmers who operate through district cooperative banks.”
The biggest network of the cooperative is essentially confined to the three big states of Maharashtra, Gujarat and Karnataka. Over the years, there have been massive mismanagement leading to RBI interventions in fixing the problems in the Maharashtra State Cooperative Bank (MSCB).
There are 35 DCCBs with 5,000 branches across Maharashtra. The banks are estimated to have more than Rs 2 lakh crore in cash deposits.
A week ago, MSCB chairman and BJP MLC Praveen Darekar led a delegation of DCCB heads to Chief Minister Devendra Fadnavis to apprise him of the problems faced by farmers post demonetisation.
Darekar said, “While the decision may have been taken with good intention, daily functioning of the banks has been adversely hit. The lack of liquidity as cash flow has stopped. Disallowing deposit of old notes is a bad decision.”
After studying the ground reports, Fadnavis had called upon Union Finance Minister Arun Jaitely seeking his intervention to relax the norms.
Officials in the cooperative ministry, however, said if DCCBs were allowed to accept old currencies it would provide some people a safe haven to park their black money.
“Unlike national banks which are closely under RBI scrutiny, DCCBs are governed by NABARD, which does not have the same monitoring mechanism to check corruption,” said an official.
Dismissing these fears, Patil said, “The RBI has every right to monitor the banking activities of the DCCBs. Nothing stops it from subjecting these banks to scrutiny and taking action where it finds unaccounted deposits or black money. In 2004, Section 110 of the Instrument of Banking Regulation Act was amended paving the way for three conditions set by the RBI for issuing licences to these DCCBs. So, how can anybody argue that DCCBs cannot be under the RBI’s radar to curb the circulation of black money?”
The Centre’s directives to NABARD to infuse Rs 21,000 crore in DCCBs to help farmers avail crop loans is a move to counter hardships to the agriculture sector. However, many believe it is not adequate.
Patil said, “In rural Maharashtra, 80 per cent people, including farmers, use DCCBs and only 20 per cent keep their money in nationalised and commercial banks. For every three DCCB branch in taluka level, there is just one commercial bank. How can you stop people from depositing money in their own account?”
The voices of dissent also emerged from Gujarat where BJP’s Vitthal Radadiya, chairman of the Rajkot Cooperative Bank, has demanded withdrawal of the RBI ban.
However, the finance department cited RBI’s directives and said, “The customers who have account in DCCB can withdraw money upto Rs 24,000 as done in any other bank. The only restriction is for depositing old notes.”