Bombay HC to hear DCC banks’ petitions against conflicting RBI, MoF orders
The Bombay high court on Wednesday will hear petitions filed by several District Central Cooperative (DCC) banks from Maharashtra challenging the Reserve Bank of India’s decision to exclude them from the nationwide process of demonetisation.mumbai Updated: Dec 14, 2016 09:48 IST
The Bombay high court on Wednesday will hear petitions filed by several District Central Cooperative (DCC) banks from Maharashtra challenging the Reserve Bank of India’s decision to exclude them from the nationwide process of demonetisation by prohibiting the DCC banks from accepting demonetised note of the denomination of Rs 500 and Rs 1,000, and exchange those for newly introduced currency.
Acting on the petitions, the court had earlier asked the Ministry of Finance to clarify as to its demonetisation notification and the RBI circular of November 14 are conflicting. The circular had kept DCC banks out of the demonetisation process.
The MoF notification has specifically included state cooperative banks in demonetisation process, but the November 14 circular issued by RBI has specifically prohibited DCC banks from accepting any deposits in the form of demonetised Rs500 or Rs1,000 notes or exchange the old notes.
Solapur DCC Bank complained that it has an account with the State Bank of India but since November 12, SBI has refused to accept old currency as the bank’s own deposit and since all cheques issued by the customers of the bank were cleared through SBI, now they were likely to be dishonoured en-masse.
Mumbai Bank has said in its petition that the RBI does not have the power to issue such a circular which is against the license provided to them. It also calls the circular discriminatory as all other banks, including urban co-operative banks have been allowed to carry out business as usual, except them, though they act as clearing agents for many urban co-operative banks. “The circular has the effect of discouraging the customers from maintaining their accounts with the petitioner bank and encourages them to transfer the accounts to another bank,” reads the petition.
The bank’s petition stated that apart from accounts of 12,285 housing societies, there are 1,03,873 savings accounts including of many hospitals, petrol pumps, medical stores and educational institutions – some of which have been asked to accept old currency notes.