Raising concern over the crisis being faced by district central cooperative (DCC) banks, Karnataka Chief Minister Siddaramaiah has shot off a letter to Union Finance Minister Arun Jaitley seeking rollback of the RBI decision to ban deposits of old Rs.500 and Rs.1000 denomination notes by these banks in commercial banks. He also questioned the legal tenability of such a decision.
This is not the first letter written by the Chief Minister to the Finance Minister on the issue. Earlier, on 14th and 17th November, too, Siddaramaiah had written similar letters, but did not get any response to those letters.
On Tuesday, the Chief Minister wrote on Twitter on his official handle @CMofKarnataka: “Request Hon Fin Min @arunjaitley to look into concerns raised & allow DCC banks to play their legitimate banking role at par with othr banks”
Pointing out that co-operation banks are the backbone of the nation’s rural economy, he said people in rural areas, especially farmers, were unable to carry out even legitimate transactions with co-op banks due to the RBI restriction.
He also questioned the discrimination shown towards DCC banks, which primarily caters to the farming community, as urban co-op banks have time till 30th December, 2016, to accept old currency notes, but no such window has been provided to DCC banks.
In his letter to the Finance Minister, he wrote: “DCC banks in Karnataka have received deposits of about Rs.1,800 crore, of which Rs.535 crore is still in balance with them. Now with the direction of the RBI, the legal position of this Rs.535 crore has become uncertain.”
He wrote: “If DCC banks are not able to deposit the Rs.535 crore lawfully received by them, they would be failing their clients, who predominantly are farmers. That would amount rendering a double whammy to the agrarian community, which is already suffering the consequences of successive droughts.”