The Cabinet has decided to declare a moratorium on repayment of loans issued by cooperative banks till March 31, 2017 in the wake of the financial crisis triggered by the demonetisation of Rs.1,000 and Rs.500 notes.
The decision was announced by Cooperation Minister Kadakampally Surendran soon after the Cabinet meeting on Wednesday. Later, Chief Minister Pinarayi Vijayan and Mr. Surendran expressed their resolve to adopt Know Your Customer (KYC) norms and core banking system in all cooperative credit societies ranging from primary credit cooperative societies (PCCSs) to the Kerala State Cooperative Bank.
Addressing a central bank conference here to resolve the hassles being faced by the cooperative credit societies across the State, Mr. Vijayan said that cooperative banks should adopt the core banking system from March next and also the KSCB should take a leadership role in leading the credit societies at the primary level to District Cooperative Banks (DCBs) out of the present impasse.
The restrictions enforced by the Reserve Bank of India on cash transactions of cooperative banks were causing great hardships to the customers.
Mirror accounts
He proposed that the PCCSs open mirror accounts in DCBs so that financial transactions could he conducted without any hitch. (Mirror account is a zero-balance account proposed to be opened by each account holder of a PCC in the DCB so that the latter can do transactions for the account holder and then make adequate financial adjustments in due course).
But the DCBs and PCCSs should reconcile their statements every day, he said.
Mr. Vijayan mooted uniform software for all lending societies and reiterated that the government was not opposed to any scrutiny of the sector, be it the Enforcement Directorate or other agencies.
No to RBI control
Mr. Vijayan clarified that the cooperative sector could not be brought under the complete control of the RBI as it would deny the sector the freedom for taking up social welfare activities.
Moreover, the banks were being managed as per the provisions of a legislation enacted by the Assembly.
Those active in the cooperative sector should conduct house visits to win the confidence of the stakeholders, he said. Mr. Surendran said cooperative banks would approach the RBI for taking over demonetised currency to the tune of Rs.1,624 crore now being held by the banks.
