Cooperative Banks can Now deposit Old Currency Notes with RBI

The Union Finance Ministry has authorized district central cooperative banks (DCCBs) to deposit old currency notes with the RBI within 30 days and receive credit for the same.

According to an officer from the cooperative department, Rs 4,600 crore was deposited in these banks. Out of this, Rs 2,771 crore were in banned denominations. “The RBI and National Bank for Agriculture and Rural Development (NABARD) had expressed doubts that this huge amount in district cooperative banks in old demonetised currency may be black money. Hence, the Union government did not permit exchange of these old currency notes,” said Sudhir Mungantiwar, Maharashtra’s finance minister. Nasik DCC bank had challenged the decision in the Supreme Court, but lost.

The old currency notes have been lying with the DCCBs since November 2016 when the announcement on demonetisation was made. The government had said that they were ineligible to exchange or receive demonetised currency. The banks that worst affected were the ones in Gujarat, Kerala, Maharashtra and Tamil Nadu. These banks are politically connected and hence the decision to declare them ineligible was taken. With this decision in force, these banks said that they were finding it difficult to raise money and even advance crop loans to farmers. DCC banks in Maharashtra alone were holding on to demonetised currency to the tune of Rs 2,270 crore.

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