Note ban: Kerala asks govt to lift curbs on cooperative banks

Work at Kerala’s cooperative banks has come to a halt after the RBI barred them from exchanging or accepting deposits of old Rs500 and Rs1,000 notes


According to the ruling LDF government, cooperative banks are far easier to access than commercial banks, as seen in an estimated deposit base of Rs1.27 trillion and loans of Rs1 trillion in those banks in Kerala. Photo: Hemant Mishra/Mint
According to the ruling LDF government, cooperative banks are far easier to access than commercial banks, as seen in an estimated deposit base of Rs1.27 trillion and loans of Rs1 trillion in those banks in Kerala. Photo: Hemant Mishra/Mint

Bengaluru: A special session of the Kerala assembly on Tuesday passed a resolution asking the centre to allow cooperative banks to exchange old Rs500 and Rs1,000 notes and accept deposits like commercial banks. Work at the state’s cooperative banks has come to a halt after 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Bank of India (RBI) barred them from exchanging or accepting deposits of old Rs500 and Rs1,000 notes after they were withdrawn from circulation on 8 November.

Politicians from across parties strongly backed cooperative banks and narrated the problems faced by people who depend on them. According to the ruling Left Democratic Front (LDF) government, cooperative banks are far easier to access than commercial banks, as seen in an estimated deposit base of Rs1.27 trillion and loans of Rs1 trillion in those banks in Kerala.

Both the ruling LDF led by Communist Party of India (Marxist) or CPM and the Congress-led United Democratic Front (UDF) opposition came together to pass the resolution. However, the lone Bharatiya Janata Party (BJP) member in the house, O. Rajagopal, did not support the move.

While opposition leader Ramesh Chennithala alleged Prime Minister Narendra Modi was trying to impose financial fascism in the country with demonetisation, chief minister Pinarayi Vijayan alleged it was done to enslave the states to the centre.

Vijayan said an all-party delegation from Kerala will meet Modi and finance minister Arun Jaitley on 24 November to bring to their notice the crisis faced by the cooperative sector, according to news agency PTI. Regarding the apprehensions about their money deposited with cooperative banks, Vijayan said account holders in these banks did not have to worry about their funds and that the “government gives guarantee that their deposit is safe,” PTI reported.

Vijayan also brushed aside the BJP state leaders’ charge that the cooperative sector has been used for money laundering and was a hub of black money hoarders, while finance minister T.M. Thomas Isaac said the state welcomes any move to check money laundering or black money in cooperative banks but not at the cost of stoppage of their functioning.

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