Curb on exchange at cooperative banks hits Maharashtra’s rural economy
The banks have been prohibited from taking banned notes from their account holders and do not hold any transactions with them. It has brought business to a haltmumbai Updated: Nov 19, 2016 00:55 IST
With the union finance ministry refusing to allow 31 district central cooperative (DCC) banks to carry out transactions with demonetised currency, the rural economy is in trouble.
Rural cooperative banking is a major source of finance for most farmers in Maharashtra. The banks have been prohibited from taking banned notes from their account holders and do not hold any transactions with them. It has brought business to a halt.
Former revenue minister Eknath Khadse, who controls the Jalgaon DCC bank, has decided to file a petition against the decision in the Aurangabad bench of the Bombay high court. Meanwhile, Nationalist Congress Party (NCP) chief and former union agriculture minister Sharad Pawar met union finance minister Arun Jaitley in Delhi and requested him to reconsider the decision.
The Maharashtra State Co-operative Bank is at the top of the three-tier co-operative credit structure, followed by DCC banks -- most of them controlled by Congress and NCP leaders -- and more than 21,085 primary agricultural credit societies (PACS). Around 48 lakh farmers have taken crop loan from DCC Banks. The PACS have around 1.14 crore members, majorly farmers.
Around 80-90% farmers have accounts at district banks only, as the government directives specify that those associated with the cooperative movement must deal with these banks only.
“The objective was to strengthen cooperative movement, but the prohibition has adversely affected the rural economy. Farmers have no money to carry out their farm operations,” Khadse said, adding he has asked his legal team to challenge the move.
While parties, including the Shiv Sena, has criticised the RBI’s decision, state cooperation minister Subhash Deshmukh said the CM has approached the union finance minister in this regard. “I admit farmers are facing trouble, but as Prime Minister Narendra Modi has said, we all need to be patient for the welfare of the country,” Deshmukh told HT.
Former chief minister Prithviraj Chavan, who dissolved the MSC Bank for financial irregularities, said he doesn’t understand the decision as urban cooperative banks are allowed to function, while rural cooperative banks cannot. “If he [Jaitley] has internal intelligence on money laundering by these banks, their licenses must be cancelled. The finance minister cannot take arbitrary decisions,” Chavan said.