RBI decision to accept demonetised notes to help solve Maharashtra loan waiver crisis

Last week, senior Shiv Sena minister Diwakar Raote had said that the decision would free up around Rs 2,270 crore and can be used to disburse loans to the farmers.

Published: 21st June 2017 10:57 PM  |   Last Updated: 21st June 2017 10:57 PM   |  A+A-

Demonetised notes

By Express News Service

MUMBAI: The government notification to allow the Reserve Bank of India (RBI) to accept demonetised currency from the district central cooperative banks (DCCBs) is likely to help solve the Maharashtra loan waiver crisis.
Cooperatives minister Subhash Deshmukh on Wednesday said, “Many of the DCCBs had been complaining that they don’t have funds to disburse as loans and hence we had asked commercial and nationalised banks to adopt the affected districts. But, with the new notification, the 14 DCCBs will be able to distribute loans themselves.” 

Last week, senior Shiv Sena minister Diwakar Raote had said that the decision would free up around Rs 2,270 crore and can be used to disburse loans to the farmers.

Raote, on Wednesday, said that the government notification has made it clear that the demonetised notes, collected during the five-day window between November 10 and 14, 2016, can deposited with the RBI until July 20. 

Reacting to the notification, chief minister Devendra Fadnavis urged all commercial, nationalised and cooperative banks to immediately release interim advance of Rs 10,000 to farmers as announced by the state government. He was addressing a special meeting of state-level banking committee (SLBC) at Sahyadri state guest house here.

"We have asked the banks to deposit the interim advance of Rs 10,000 in the accounts of farmers with pending crop loans immediately by taking a self-declaration that they comply by the revised norms set by the state government," Fadnavis told the media after the meeting.

He also hailed the central government's decision to help DCCBs deposit demonetised currency with the RBI. The decision will help the banks to disburse loans to farmers easily, he said.

Initially, DCCBs were accepting demonetised currency with the permission from the RBI, but had stopped afterwards. The National Bank for Agricultural and Rural Development (NABARD) then had conducted an inspection of the demonetised notes twice. 

During the first one, they found that the 'know your customer' (KYC) norms were not met by the bank accounts. The Supreme Court too, meanwhile, had ruled that the old currency for the accounts that comply with the KYC norms should be accepted by the RBI. 

The NABARD then conducted its second inspection about a month back and found that almost all the accounts complied with required norms. This paved the way for the decision, Raote said. 

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