AS THE effects of demonetisation fades significantly in the urban areas, a crisis seems to be brewing in the rural parts of the state as 31 District Central Cooperative Banks (DCCB)s have reported an exodus of funds. Between November 8 , 2016 and January 2017, 31 banks have reported Rs 7,087 crore being debited from their accounts and only Rs 2,241 crore being credited back to them. In the absence of any concrete move by both the RBI and Nabard, directors of these banks now fear for bankruptcy if urgent steps are not taken to address this exodus of funds.
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Known for their wide rural footprint, the DCCBs have served as the nearest bank for many remote areas. Over the years, the share of the DCCBs in distribution of crop loan might have fallen to just 30 per cent of the total outlay but these banks still play an important role in the rural economy serving as the banking outlet for sugarcane payments, salaries for primary teachers etc. All cooperative institutions like sugar mills, dairies, spinning mills etc solely bank on these banks and disburse their payment through them.
Since demonetisation, operations and transactions in these banks have almost stopped due to various restrictions put on them by the RBI. These banks were stopped from exchanging or depositing withdrawn notes and their demands for cash for distribution to their customers was hardly met. The RBI had maintained that the KYC norms of the account holders was not up to the mark. Following a PIL in the Supreme Court, Nabard had collected voluminous information about the accounts but the process of physical verification of the accounts is yet to start. The old currency notes that the banks had collected before the ban on them still lies unremitted in the vaults of the banks. On paper, these banks are now saddled with Rs 2,743 crore in withdrawn currency notes which the RBI or any other currency chest bank has refused to exchange with new currency notes.
Between November and January, these banks had received Rs 2,241 crore of cash of which Rs 1,600 crore was from currency chest banks while Rs 641.49 crore was from local sources. As cash runs, account holders in these banks have taken to electronically transfer their money into banks, which are in a position to disburse cash. Thus, records show that between November and January, Rs 7,087.21 crore has been transferred out of these banks through RTGS while incoming RTGS is to the tune of Rs 4,971 crore – mostly in form of payments and salaries. Pune, Sangli, Ahmednagar, Raigad and Thane DCCBs have reported maximum outgoing RTGS.
The imbalance, bankers say, is like a ticking timebomb that might result in around 7 banks losing their licence. “RBI regulations have mandated that banks which fail to have 9 per cent capital adequacy ratio (CAR) by March 2017 might end up losing their banking licence. If the imbroglio continues, 7-8 banks might just lose their licence,” said a senior official from the cooperative department.
Suresh Birajdar, chairman of the Osmanabad DCCB, said despite them submitting all the documents to Nabard, the cash crunch continues at their ends. “We are finding it difficult to continue our normal banking operations,” he said.