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Demonetisation: Old currency worth Rs 8,000-cr lying with district Co-Op Banks: Sharad

Kashmir Times. Dated: 3/29/2017 11:03:59 PM

NEW DELHI, Mar 29 (Agencies): Around Rs 8,000 crore in junked Rs 500 and Rs 1,000 notes is piled up with 371 district central cooperative banks after RBI barred Currency Chest Banks from accepting them, veteran NCP leader Sharad Pawar said today.
Making a zero hour submission in the Rajya Sabha, Pawar made a passionate plea to the government for allowing the old currency lying with district central cooperative banks (DCCBs) to be deposited with currency chests.
The presence of such huge quantity of demonetised currency is restricting the ability of DCCBs to lend, impacting agricultural credit in the rabi season, he said.
After the demonetisation on November 8, 2016, the government had barred DCCBs from accepting deposits of the junked currency or exchange them for new ones.
However, they were allowed to accept deposits of the junked currency or exchange through corrigendum dated November 9, 2016. Again on November 14, 2016, DCCBs were restrained from accepting or exchanging the old notes.
"Thus the DCCBs received deposits of specified bank notes (old currency) from November 10, 2016 to November 13, 2016. Between this period, throughout India, 371 DCCBs received deposits worth Rs 44,000 crore. But 31 DCCBs based in the state of Maharashtra, secured Rs 4,600 crore as deposits," he said.
However, on November 17, 2016, Reserve Bank of India issued guidelines to Currency Chest Banks restricting them from accepting SBNs from DCCBs.
"Subsequently, the DCCBs have accumulated SBNs and are advised to retain them, till further instructions from the RBI. As a result, by November 17, 2016, DCCBs in India were still holding SBNs of more than Rs 8,000 crore and cooperative banks in Maharashtra are holding Rs 2,772 crore," he said.
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Besides restricting the currency chests from receiving SBNs from DCCBs, the banks were also informed that the junked currency cannot form part of bank cash balances.
"The SBNs cannot be part of cash balances of the bank from the close of business as on December 31, 2016. The accumulated SBNs are having a detrimental impact on the financial health of the DCCBs. Because the SBNs cannot form part of cash balances, they are lying as non-earning assets with DCCBs," he said.