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The Centre’s decision to allow District Central Cooperative Banks (DCCBs) to deposit demonetised currency notes lying with them with the Reserve Bank of India, has brought much cheer to the cooperative lenders.
“The move is well-appreciated by the DCCBs. This will not only help them do away with the demonetised notes which they had stored for the past eight months, but will also ensure additional liquidity with the DCCBs to help them resume lending in full-swing in the upcoming kharif-sowing season,” Dilip Sanghani, Chairman of National Federation of State Cooperative Banks, told BusinessLine . Currently, lending activity at the DCCBs has slowed down due to lack of adequate cash, Sanghani said.
The DCCBs across the country are believed to be stuck with demonetised currency notes worth ₹23,000 crore, of which Maharashtra, with 31 DCCBs, has the largest pile at ₹2,770 crore, followed by Gujarat at ₹2,000 crore. Sanghani, who is also the Chairman of the Amreli District Central Cooperative Banks in Gujarat, said the Federation has written a letter to the Union Finance Minister Arun Jaitley to reimburse the cost incurred by the DCCBs for maintenance and security of the junked notes and also compensate the banks with the interest foregone for the eight months.
“These banks had borrowed money from either Nabard or State governments. Their interest payments continued to accumulate. Hence, they need to be compensated as well,” said Sanghani.
According to him, out of the 18 DCCBs across Gujarat, three from the districts of Vadodara, Amreli and Panchmahal had zero deposits of demonetised notes during the period prescribed — November 10-14, 2016. On November 8, 2016 Prime Minister Narendra Modi had announced demonetisation of high-value currencies of ₹500 and ₹1,000. From November 14 onwards, the RBI had barred the DCCBs from accepting old notes citing KYC issues.
In a gazette notification on Wednesday last, the Centre said that the DCCBs can deposit the specified bank notes (SBNs) under the Specified Bank Notes (Deposits by Banks, Post Offices and District Central Cooperative Banks) Rules, 2017 with the RBI and get the exchange value thereof by credit to the account of such banks, post offices or district central cooperative banks.
The notification gives such bank, post office or district central cooperative banks 30 days from the commencement of the rules to deposit the notes at any of the RBI branches.
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