How Notes Ban Has Stalled Maharashtra’s Rs. 10,000 Farm Handout – legacy of demonetisation has stalled the cash handout

How Notes Ban Has Stalled Maharashtra’s Rs. 10,000 Farm Handout – legacy of demonetisation has stalled the cash handout

NASHIK: Almost two weeks after announcing a farm loan waiver, the Maharashtra government said it would give farmers Rs. 10,000 cash to meet their immediate needs for sowing the next round of crops.

But the legacy of demonetisation has stalled the cash handout.

Several of Maharahstra’s district central cooperative banks or DCCB’s, an important arm of rural banking, say they do not have cash.

The reason, the banks say, is that nearly six months after demonetisation, they still have crores of cash in old currency, which the Reserve Bank of India (RBI) is refusing to accept.

Nashik’s District Central Cooperative Bank told us they still have a stockpile of Rs. 340 crore in old 500 and 1,000 notes.  Unless this money is converted to new, payments will be hard to make, said Narendra Darade, Chairman of Nashik’s DCCB.

In Akola too, bank officials stated the same problem.

“RBI has not taken cash (old) from us from the head office, that’s why we have a problem of cash. If a person wants to withdraw Rs. 50,000, we tell him to withdraw only Rs. 10,000,” said Babarao Vasu, Bank Manager, Akola District Central Cooperative Bank.

Being contacted five other district central cooperative banks also came across with a similar response.

Across Maharashtra, a total amount of Rs. 2,770 crore in old notes is lying with district central cooperative banks, said Maharashtra State Cooperative Bank Chairman Dr ML Sukhdeve.

The Rs. 500 and Rs. 1,000 old notes have not been accepted, so that means it is lying with DCCBs. And because of this there is a liquidity problem,” said Dr Sukhdeve.

The backlog is the result of a long-running dispute between the DCCB’s and the RBI, affecting cooperative banks all over India.

On November 14 last year, six days after demonetisation was announced, the RBI issued a notice saying that DCCB’s are not allowed to accept any deposits or exchange of old currency, as cooperative banks are not regulated by the RBI. By then, between November 10 and 14 an estimated Rs. 10,000 crore in old notes had been deposited with cooperative banks.

The DCCB’s went to the Supreme Court; the Court asked National Bank for Agriculture and Rural Development (NABARD), to submit a report on Know Your Customer (KYC) diligence by district banks. According to a district bank official, NABARD’s report has been sent to RBI several months ago, but there has been no decision.

The RBI was not available for comment.

They (RBI) have asked NABARD to have the ‘know your customer’. NABARD has done this. We are expecting a decision from the RBI,” said Dr Sukhdeve.

Meanwhile, farmers who visit these banks for their Rs. 10,000 are being turned back.

Outside Nashik District Central Cooperative Bank, Vishnu Jadhav said he has a loan of 1.15 lakh and has no money to repay it. “I have made no money with my grape crop this season. Now I need 10,000 rupees for the next crop and the bank is saying that they do not have money,” he said.

Source: NDTV