Mumbai: India’s apex rural bank has started verifying the credentials of those who deposited old currency notes worth Rs7,000 crore at cooperative banks in the early days of demonetisation, a task it must finish in a month, two people familiar with the matter said.
The National Bank for Agriculture and Rural Development (Nabard) has deployed 800 officials for the physical verification of Know-Your- Customer (KYC) documents of over five million district central cooperative bank (DCCB) accounts and 180,000 primary agriculture credit society (PAC) accounts, the people said, on condition of anonymity.
“The verification process is a long, tedious one. Nabard has to check which customers’ money has gone to the currency chest and which is lying with the banks. It will be difficult to do rupee-by-rupee check of all notes lying with the banks,” said one of the persons familiar with the matter. “Nabard has been asked to complete the process by mid-March. It’s going to be a challenge,” the person added.
When contacted, a Nabard spokesperson declined to comment.
Banks across India, including cooperative banks, started exchanging and receiving deposits of invalidated Rs500 and Rs1,000 from 10 November. Four days later, on 14 November, the Reserve Bank of India (RBI) prohibited cooperative banks from accepting these notes. By then, as per Nabard data, about Rs22,446 crore was already deposited at 370 DCCBs and moved to RBI’s currency chests with no KYC verification.
About Rs7,000 crore was still lying with these banks at that time, which RBI has refused to accept, fearing some of it may be illicit cash. The banks approached the Supreme Court, which directed Nabard—which supervises DCCBs—to verify the KYC details of individuals and PACs who deposited this money. Since there is no data on who all have deposited the Rs7,000 crore, Nabard will check the KYC details of all account holders.
Results of the Nabard exercise will also have a bearing on the final count of banned notes that returned to the system. At a post monetary policy press conference last week, RBI deputy governor S.S. Mundra had said the final numbers will be revealed after 30 June when all windows for depositing old notes will be closed.
“The reconciliation of physical cash and receipt of cash as per data from bank accounts is going on; so, we hope that in the coming times, this will be completed,” said Mundra. “After the final verification on a piece-to-piece basis, you must understand that such big amount of currency has been withdrawn on such a large scale, it will take some time, but that we will tell you in due course”, he added.
RBI had earlier released a figure of Rs12.44 trillion of old notes deposited in banks by 10 December, which was later retracted suspecting instance of double-counting of deposited notes. Last week, RBI said that post demonetisation, it had pumped in Rs9.92 trillion worth of currency notes into circulation. It was estimated that Rs15.45 trillion worth of old notes accounting for 86% of old Rs500 and Rs1,000 notes was in circulation before demonetisation.