District cooperative banks across Maharashtra say they lost ₹230 crore, want government to help
Mumbai city news: The banks said that they could have paid the amount to account holders or could have gained from the loans that they could have disbursed in seven monthsmumbai Updated: Jun 24, 2017 10:59 IST
After being allowed to deposit their stock of demonetised notes worth Rs2,772 crore in the Reserve Bank of India within a month, 31 district cooperative banks (DCCBs) across the state claimed that they suffered a loss of Rs 230 crore and plan to ask the government for help.
The banks said that they could have paid the amount to account holders or could have gained from the loans that they could have disbursed in seven months. The DCCBs have now planned to ask the government for recovery of the loss.
After demonetisation was announced on November 8, 2016, the DCCBs were allowed to collect or deposit the old notes of Rs500 and Rs1,000 till November 14, while other commercial and private banks were allowed time till December 30. The decision was taken on June 22, about seven months after the notes were deposited and DCCBs could not do anything about the notes for all this time. Additionally, they had to pay interest to the account holders who deposited the notes with them, leading to the burden.
“This has happened just because the government looked at us suspiciously. NABARD revived our KYC protocols thrice and could find nothing suspicious about the deposits. The decision to allow the exchange has itself proved that the earlier decision was wrong. Now the government take responsibility of the losses,” said the chairman of a leading bank on the condition of anonymity.
The Maharashtra State Cooperative Bank Association(MSCBA), which represents the DCCBs, has decided to write to the government for the recovery. “We have figured the loss sustained by each of the banks. Barring the cash reserve ratio (CRR) of 4% for the deposits, the loss towards interest on the, and the earnings from loans comes to Rs230 crore,”said Vinayak Taral, expert director of MSCBA. “We will soon write to the Centre and the state government.”
“By reversing its decision, the Centre has admitted that the currency deposited with us was legitimate. We hope that it will accept our demand,” Aman Gawande, chairman of Yavatmal DCCB said.
Stocking old notes was not easy, said officials. “The notes had no protection of insurance cover as they were no more part of the tender currency. Secondly, maintaining and protecting this stock from termites was a huge challenge and led to a huge loss,” said Hasan Mushrif, head of the Kolhapur DCCB and former minister.
Sources in the cooperation department of the state government, however, are doubtful about the claim. “There is no doubt that the DCCBs suffered losses due to the interests accrued or potential lending, but it would be wrong to say that the entire deposit could have been given out in form of loans. The government is unlikely to accept the claim,” he said.