District banks prone to fake currency: RBI

The Reserve Bank of India (RBI) has conveyed to the State government that 3,800 branches of the District Central Cooperative Banks (DCCBs) cannot be allowed to exchange demonetised currency because they are prone to hawala transactions and fake currency.

The RBI pointed out to a State government delegation this week that several suspicious transactions in DCCBs in Uttar Pradesh have been reported, while banks continue to work in the absence of mechanisms to monitor fake currency. Under these circumstances, no chances can be taken in Maharashtra, the RBI said.

Finance Minister Sudhir Mungantiwar confirmed to The Hindu that there remains a question mark on the monitoring mechanisms in DCCBs and the same has been conveyed by the RBI. The RBI has disallowed DCCBs to exchange old currency at a time when only 70 per cent of them are relying on the Real-time Gross Settlement System (RTGS) to transfer funds, and have little or no mechanisms, he said.

“There are no means to check fake currency in these banks. The RBI has conveyed fear over weak monitoring systems in DCCBs,” Mr. Mungantiwar said. The DCCBs in Maharashtra have already moved court against the decision by the government and RBI to keep them under restrictions following demonitisation.

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Printable version | Mar 4, 2021 9:32:41 AM |

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