Free Press Journal

Co-op banks move Supreme Court over note ban


New Delhi : Fourteen cooperative banks of Kerala on Tuesday moved the Supreme Court against the government’s decision and a circular by the Reserve Bank of India (RBI) to exclude them from the scrapped notes’ exchange under the demonetisation drive.

Their lawyer mentioned the petition before the Bench headed by Chief Justice T S Thakur for an immediate listing. The Court, however, agreed to hear them on Friday when it would be hearing the PILs challenging the demonetisation notice and complaints of hardship created by it.

The cooperative banks have sought the apex court’s nod to handle cash on par with state-run banks, claiming that the government’s decision not to allow the district cooperative banks to exchange old notes was discriminatory as they operated according to the RBI”s guidelines.

Their petition said allowing the private banks to exchange old notes while restricting district cooperative banks from doing so, amounted to discriminatory practice.

The Bench also listed on December 2 another petition of Delhi BJP spokesman Ashwini Upadhyay seeking an order to restrict the cash transaction up to the limit of Rs 5000 and withdraw the online/credit card transaction charges to promote cashless transaction. His petition also sought withdrawal of all direct and indirect taxes, except customs and import duties.

Kerala”s cooperative banks are not the only banks affected by the government’s decision on not allowing them to exchanged the scrapped notes. The government-licensed cooperative banks in many states, including Punjab, have landed in trouble from a circular issued by the RBI on November 14 that it would not accept the scrapped notes collected by the cooperative banks.

“We were accepting the scrapped notes since November 10 and do not know what to do with the notes received because of the RBI stopping us from dealing in these notes,” said a senior official of the Punjab State Cooperative Bank.

Like other banks, cooperative banks were allowed to exchange up to Rs 4,000 per day at the counter till November 14, starting November 10. However, on November 14, the exchange of invalid notes in the cooperative banks was banned.

The cooperative banks are also not able to disburse loans to the farmers for the rabi crop since the farmers become eligible only when they return the loan taken for kharif crops and they are not able to pay back the loans in the scrapped notes since the cooperative banks cannot accept them, the official said. Due to this reason, the recovery of the short-term loan advanced during the last kharif season by cooperative banks to farmers has come to a standstill, he said.

Besides, farmers who cannot repay their loan in cash would have to pay penal interest on the delay in repaying the crop loan taken during the kharif season. They will also not be eligible for the 3-per cent subvention in interest, which is allowed to farmers, who repay their loan by due date.

There are about 10 lakh farmers in Punjab who take loans from the cooperative banks twice a year. Of these, 75 per cent are small and marginal farmers, who cannot afford to do farming without taking a loan, the official said.

Managing Director of Punjab State Cooperative Bank SK Batish said, “We have appealed to farmers that if they have accounts in other commercial banks, they should deposit the money in those accounts and transfer the same by using the RGTS system to their accounts in cooperative banks.”