The nine district credit cooperative (DCC) banks in the State, which are stuck with a pile of ₹473 crore worth of demonetised ₹500 and ₹1,000 notes, could expect relief as the National Bank for Agricultural and Rural Development (NABARD) inquiry has not found any large-scale irregularities with the currencies deposited after demonetisation.
The DCC banks were left in the lurch after the Reserve Bank of India (RBI) barred them from depositing these “specified bank notes” after they had accepted the old notes through deposits, or had exchanged them between November 9 and 14. While these banks were barred from handling demonetised currencies on November 14, the RBI, in another circular on November 17 barred them from depositing the demonetised currencies that they had collected in nationalised banks following instances of irregularities reported across the country.
While 21 DCC banks in Karnataka collected ₹1,863 crore in old currency between November 9 and 14, ₹473 crore was yet to be remitted by nine DCC banks when the November 17 directions from the RBI came.
“We have not found irregularities with the way the DCC banks have collected the demonetised notes,” said a top source in NABARD told The Hindu. The report on the nine DCC banks has already been submitted, the source said.
NABARD had been tasked to identify the quantum of money lying idle with the banks and if Know Your Customer (KYC) norms had been adhered to while accepting or exchanging the currencies. “We hope that the RBI takes note of the report and allows the currencies to be deposited with the RBI or any other notified bank.”
Several functionaries, including Chief Minister Siddaramaiah, have written to the RBI and the Union government to immediately intervene to bail out DCC banks whose financials could be affected if they continued to hold the demonetised pile of notes.
Losses to banks
District central cooperative banks have been incurring losses since ₹473 crore has been lying idle after demonetisation.
“If the rate of interest is 8%, the annual outgo on interest alone is about ₹40 crore. This means for deposits lying idle with these banks, nearly ₹15 crore has to be paid as interest for the four-and-a-half months since November 9. Losses have also been incurred for not deploying this money for loans, which help banks to pay interest on deposits,” said a senior banker at the KSCA Bank.
He also said that these losses could affect the DCC banks’ capacity to take loans from the KSCA Bank and NABARD.
