The crisis triggered by the ongoing demonetisation drive could potentially make all co-operative banking institutions in Tamil Nadu defunct in the next 10 to 20 days unless urgent steps are taken to address certain issues being faced by them, a top official told the Madras High Court on Friday.
The Joint Registrar of Co-operative Societies and Managing Director of the District Central Co-operative Bank (DCCB), Villupuram, through a counter affidavit in a case related to demonetisation, submitted that due to the withdrawal of the two high denomination currency, the district banks and their affiliated primary agricultural co-operative societies are unable to lend loans to several lakh farmers.
“If this situation continues for another 10-20 days, the entire network of co-operative institutions would become defunct,” he added.
In Villupuram district alone, 239 primary agricultural cooperative societies with 18 lakhs members, 57 Employees Co-operative Thrift and Credit Societies with 22,085 members and five co-operative marketing societies with 38,877 members and other affiliated societies had been put to financial hardship from November 10 onwards, he added.
Explaining the situation at the State-level, he said, “All over Tamil Nadu, a total of 23 such DCCBs, their branches and around 4,500 affiliated primary agricultural cooperative societies, and around 2,000 employees of co-operative credit societies have been put to financial hardship.” Noting that the farming season is at its peak only during the ongoing north-east monsoon, the officer said that denial of credit facilities to farmers through primary agricultural co-operative societies amounted to denial of their legitimate right to crop loans.
Against this background, the official wanted the court to permit DCCBs and Primary Agricultural Co-operative Credit Societies (PACCS) to accept demonetised notes of Rs. 500 and Rs. 1,000 from borrowers against their loans. He also wanted removal of the Rs. 24,000 per week per account limit, and staying of the operation of the RBI circulars in this regard. Justice N. Kirubakaran will hear the issue further on November 28.
