Cooperative societies in massive disarray

Published: 11th November 2016 01:32 AM  |   Last Updated: 11th November 2016 03:13 AM   |  A+A-

Express News Service

THIRUVANANTHAPURAM: The demonetisation process has thrown the banking activities in the over 1600 primary agricultural credit cooperative societies (PACS) into disarray.

The RBI circular issued after the ban had excluded district cooperative banks, the apex bodies of PACS from accepting the banned denominations of Rs 500 and Rs 1000 or offering exchange facility. Following a request by the state government, RBI’s regional office made a relaxation on Thursday by allowing DCBs and PACS to collect deposits but without exchange facility. However, the lending activities of PACS will be at a standstill until November 26 as  they could withdraw only Rs 10,000 a day from its working capital deposited with the  DCBs concerned.

"RBI's latest communication does not mention about any special privilege for PACS and hence the DCBs can consider them only as normal account holders. They will be eligilble to withdraw Rs 10,000 a day within an overall limit of Rs 20,000 a week," said Idukki DCB's general manager A R Rajesh. He said the DCBs would submit a representation to the RBI seeking relaxation to PACS which would enable them to withdraw higher sums.

Varkala MLA and general secretary of the Kerala Primary Cooperative Societies Association V Joy said the withdrawal restriction would shatter the business of PACS and affect loan aspirants.

“Thousands of poor loan applicants - for different purposes like education, agriculture or marriage - will be affected by the fund shortage in PACS. We will meet RBI officials on Thursday and request them to remove the withdrawal cap,” he said. Joy said the exclusion of cooperative banks from Union Government’s major banking initiatives was part of a larger plot to weaken the cooperative movement in state.
The DCBs too are a concerned lot over the denial of exchange facility to them. “We hold RBI’s banking licence and has ensured 100% KYC compliance.   It is unfortunate that we are denied the facility while even business correspondents of private banks are entitled to do it,” Rajesh said.


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