Cooperative banks still hold old notes
MUMBAI: Reserve Bank of India’s estimate of invalidated notes received after demonetisation may still be incomplete as highvalue notes continue to lie with a few cooperative banks, three people aware of the matter said.
Eleven District Central Cooperative Banks (DCCBs) claim they hold old notes worth ₹147 crore forming cash in hand balance as on 8 November 2016, according to one of the three people cited above. However, RBI has refused to accept these notes of ₹500 and ₹1,000 denomination lying with these banks.
Several DCCBs, including Villupuram DCCB, Kolhapur DCCB and Pune DCCB, have filed petitions in the Supreme Court requesting acceptance of these notes. The next hearing is slated on September 4, said all three of the people cited above.
Banks across India, including cooperative banks, started exchanging and receiving deposits of invalidated ₹500 and ₹1,000 from November 10.
Four days later, on November 14, the Reserve Bank of India (RBI) prohibited cooperative banks from accepting these notes. By then, as per Nabard data, about ₹22,446 crore was already deposited at 370 DCCBs and moved to RBI’s currency chests with no (know your customer) KYC verification.
About ₹7,000 crore was still lying with these banks at that time, which RBI refused to accept, fearing some of it may be illicit cash.
Several DCCBs challenged this ban in the Supreme Court, which directed Nabard—the regulator of DCCBs—to verify KYC details of individuals and PACs who deposited this money
On June 20, the government allowed DCCBs to exchange old currency notes collected from account holders between November 10 to 14, 2016. But this did not include cash in hand at the close of November 8.
“Pune DCCB has ₹22 crore worth of high value notes currently, which is cash in hand as on November 8. This couldn’t be exchanged because currency chests of banks had no space, said Sanjay Kumar Bhosale, chief executive officer, PDCC bank.
“Cash worth ₹25 crore, set aside for meeting daily liquidity requirement, is now lying with Kolhapur DCCB. This is against the Banking Regulation Act which mandates that 4% should be set aside for meeting cash reserve ratio,” said Pratapsinh Chacan, CEO, Kolhapur DCCB.
Emails sent to RBI and Nabard didn’t elicit any response.