The Centre’s move to scrap the old Rs500 and Rs1,000 notes and the cash crunch that has followed is affecting farmers in rural Maharashtra.
After nearly a month of having no access to their money, the primary agricultural credit societies (PACS) in Maharashtra went on a token one-day strike against the Centre’s decision to not allow them or their district central co-operative (DCC) banks to accept or exchange old notes. The functioning of the PACs and DCC banks came to standstill because the Reserve Bank of India is yet to change their working capital, worth Rs40,000 crore, with the new banknotes. As a result, they are unable to restart operations.
“Despite having a working capital of Rs40,000 crore, we cannot start our daily operations as the money needs to be converted to the new currency,” said Vasant Shinde, executive chairman, Maharashtra State Federation of Credit Co-operative Societies. An RBI circular issued on November 13 said no DCC bank or credit societies can exchange or deposit old notes of Rs500 and Rs 1,000. Finance minister Arun Jaitley refused to reconsider the decision. The move, however, has hit farmers the worst, as most of them have their accounts only in PAC or DCC bank. It will have a negative impact on the rural economy, as these banks are unable to provide money to farmers, especially now, when it is sowing season. “We have to give interest against deposits and pay staff. All this can happen only if we start operating,” Shinde said.
The co-operative sector has a three-tier credit structure, with the Maharashtra State Co-operative Bank as the apex body, the DCC banks at the middle level and at the bottom, more than 21,085 credit societies.