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.
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.
Pawar said DCCBs have to pay interest of at least 4 per cent on the deposits made between November 10 and 13. Also, few deposits were converted into term loans that command higher interest.
"This has a great impact on the rabi season crop loans disbursement," he said adding against the target of disbursing Rs Rs 13,500 crore loan, till date only Rs 4,000 crore or 33 per cent is disbursed.
The target of the rabi season in Maharashtra was Rs 4,400 crore, but the achievement is Rs 1,000 crore, which is just about 22 per cent.
"That means farmers are not getting crop loans. That is the overall situation. So, money is lying in the banks; other banks are not accepting; Reserve Bank is not accepting; they have to pay interest; they have to pay insurance, and money is not available for agricultural operation. It is a serious thing," he said.
Pawar said district cooperative banks are not in a position to use the money they have and it is not available for farming. "It is affecting the agricultural season."
He said he has written to the Prime Minister and the Finance Minister that the old notes lying with DCCBs be allowed to be deposited in currency chests.
His demand drew support from almost the entire opposition parties.
Minister of State for Parliamentary Affairs Mukhtar Abbas Naqvi said the concerns raised will be communicated to Finance Minister Arun Jaitley.