BackOld currency worth Rs8,000 crore lying with district co-op banks: Sharad Pawar
Sharad Pawar made a passionate plea to the govt for allowing the old currency lying with district central cooperative banks to be deposited with currency chests
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New Delhi: Around Rs8,000 crore in junked Rs500 and Rs1,000 notes is piled up with 371 district central cooperative banks after Reserve Bank of India (RBI) barred currency chest from from accepting them, veteran Nationalist Congress Party (NCP) leader Sharad Pawar said on Wednesday.
Making a zero hour submission in the Rajya Sabha, Pawar made a passionate plea to the government for allowing the old currency lying with district central cooperative banks (DCCBs) to be deposited with currency chests. The presence of such huge quantity of demonetised currency is restricting the ability of DCCBs to lend, impacting agricultural credit in the rabi season, he said.
After the demonetisation on 8 November, 2016, the government had barred DCCBs from accepting deposits of the junked currency or exchange them for new ones. However, they were allowed to accept deposits of the junked currency or exchange through corrigendum dated 9 November, 2016.
Again on 14 November, 2016, DCCBs were restrained from accepting or exchanging the old notes. “Thus the DCCBs received deposits of specified bank notes (old currency) from 10 November, 2016 to 13 November, 2016.
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Between this period, throughout India, 371 DCCBs received deposits worth Rs44,000 crore. But 31 DCCBs based in the state of Maharashtra, secured Rs4,600 crore as deposits," he said. However, on 17 November 2016, Reserve Bank of India issued guidelines to Currency Chest Banks restricting them from accepting SBNs from DCCBs.
“Subsequently, the DCCBs have accumulated SBNs and are advised to retain them, till further instructions from the RBI. As a result, by 17 November, 2016, DCCBs in India were still holding SBNs of more than Rs8,000 crore and cooperative banks in Maharashtra are holding Rs2,772 crore," he said.
Besides restricting the currency chests from receiving SBNs from DCCBs, the banks were also informed that the junked currency cannot form part of bank cash balances. “The SBNs cannot be part of cash balances of the bank from the close of business as on 31 December, 2016. The accumulated SBNs are having a detrimental impact on the financial health of the DCCBs. Because the SBNs cannot form part of cash balances, they are lying as non-earning assets with DCCBs," he said.
Pawar said DCCBs have to pay interest of at least 4% on the deposits made between 10-13 November. Also, few deposits were converted into term loans that command higher interest. “This has a great impact on the rabi season crop loans disbursement," he said adding against the target of disbursing Rs13,500 crore loan, till date only Rs4 ,000 crore or 33% is disbursed.
The target of the rabi season in Maharashtra was Rs4,400 crore, but the achievement is Rs1,000 crore, which is just about 22%. “That means farmers are not getting crop loans. That is the overall situation. So, money is lying in the banks; other banks are not accepting; Reserve Bank is not accepting; they have to pay interest; they have to pay insurance, and money is not available for agricultural operation. It is a serious thing," he said.
Pawar said district cooperative banks are not in a position to use the money they have and it is not available for farming. “It is affecting the agricultural season." He said he has written to the prime minister and the finance minister that the old notes lying with DCCBs be allowed to be deposited in currency chests.
His demand drew support from almost the entire opposition parties. Minister of state for parliamentary affairs Mukhtar Abbas Naqvi said the concerns raised will be communicated to finance minister Arun Jaitley.
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