Bengaluru : Kerala chief minister Pinarayi Vijayan on Thursday wrote a letter to Prime Minister Narendra Modi requesting immediate action to resolve the crisis faced by cooperative banks. The chief minister has asked that post demonetisation currency withdrawal at cooperative banks be put on par with commercial banks at Rs24,000 per week.
The Left leader had expressed strong displeasure with the central government on Wednesday after Prime Minister Narendra Modi refused to meet an all-party delegation from the state, which he termed as a “real shock” in the letter.
The state assembly on Tuesday adopted a resolution to relax the curbs on cooperative banks and credit societies following demonetisation. It was agreed that an all-party delegation should go to Delhi on Thursday to meet the PM and discuss the crisis in the cooperative sector after the government’s demonetisation move.
Work at cooperative banks across the country has come to a halt since the Reserve Bank of India (RBI) barred them from exchanging or accepting deposits of old Rs500 and Rs1,000 notes after they were withdrawn from circulation on 8 November. With an estimated deposit base of Rs1.27 trillion and loans of Rs1 trillion in those banks in Kerala, cooperative banks are a key source of agricultural credit, especially for small and marginal farmers.
The crisis has set in motion “undesirable impacts and long-term damage” in the cooperative banking sector, Vijayan said in the letter.
The impending danger, he said, was that of “completely destroying the agricultural and rural credit operational environment, which will surely derail the NABARD operations in the state.”
“The grama panchayats and the rural households are in doldrums, affecting the poor women neighbourhood groups,” states the letter, leading to “complete paralysis of the rural local self governance structure–the grama panchayat, the grama sabhas and the sub grama sabha peoples organizations.” It is also a human rights violation, said the CM, if the monthly welfare pension to 44 lakh of people, who are from the most vulnerable sections in the society, which are routed through the primary co-operative institutions, come to standstill.
Interestingly, Vijayan has also made some assurances towards ensuring a transparent nature in the financial operations of cooperative banks, the alleged non-existence of which was argued to be the cause behind the curbs imposed on them.
It includes reporting their financials to RBI on a regular and timely basis, fortify the membership admission and management processes with the KYC (know your customer) requirements, augmenting internal and external audit mechanisms, furnishing any requested information to the income tax authorities, along with others.