The Reserve Bank of India has conveyed to the Centre its decision to not withdraw the ban on depositing the demonetised Rs 1,000 and Rs 500 notes in district central cooperative banks (DCCBs) across the country. The central bank fears that the DCCBs would be misused to park unaccounted funds. Maharashtra, along with Karnataka and Uttar Pradesh, is among the top three states in the country in terms of a cooperative bank network and the number of account holders.
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A highly placed source in the state government said, “The RBI has adequate information to substantiate that within 72 hours of demonetisation, the flow of old currency in the DCCBs was eight times more than in nationalised banks. This raised fears that the DCCBs were being used as a route to transform black money into white.”
Almost three days after the demonetisation came into effect on November 8, the RBI banned depositing of old currency notes in cooperative banks. However, it had allowed the withdrawal of money from the banks. Along with Union Finance Minister Arun Jaitley, Chief Minister Devendra Fadnavis had urged the RBI to withdraw the ban, in view of the inconvenience being caused to farmers and residents of rural areas. Maharashtra has 35 DCCBs, with 5,000 branches. They have over 75 lakh farmers and equal number of non-farmers as clients. It is estimated that deposits of farmers and others operated through DCCBs is in excess of Rs 3 lakh crore.
However, insiders indicated that the RBI has categorically conveyed to the Centre that it would be difficult to consider the recommendations. Another significant aspect highlighted was the lack of mechanism to monitor the black money that could be easily routed through the vast cooperative bank network.
A highly placed source said, “The nationalised banks are strictly monitored by the RBI. It has put in place a flawless system to keep vigilance on fund flow. Whereas in DCCBs, the operations are entirely looked after by NABARD. Now, unlike the RBI, the NABARD does not have a foolproof network to plug black money operations.”
The RBI’s decision has not gone well with the Congress and the NCP in the state. Leader of Opposition Radhakrishna Vikhe-Patil said, “The RBI’s decision is unjustified. They should strengthen NABARD to keep a tab on those misusing cooperative banks for depositing unaccounted or black money.”