Sangli: More than 60 per cent of the district’s population have accounts with the Sangli District Central Cooperative Bank (SDCCB). Its residents already affected by demonetisation, daily life in Sangli has come to a near standstill following the Reserve Bank of India’s (RBI) directive on November 14 prohibiting cooperative banks from accepting deposits and exchanging notes.
Cooperative banks around the country have been the economic lifeline for the agrarian majority, serving remote areas where even nationalised banks have poor penetration. SDCCB is typical of such banks in other parts of India. Its 220-odd branches serve 16 lakh account holders across the district, 90 per cent of them farmers. Aside from individuals, these include primary agricultural credit societies (PACS), milk co-operatives and several smaller financial cooperatives.
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So far, SDCCB has collected Rs. 315 crore in the now-defunct notes and deposited them, but hasn’t received any of the new notes owing to the RBI ban.
Since November 14, it has received a paltry Rs. 38 crore from sympathetic banks like ICICI and SBI; but it needs Rs. 24 crore daily for its functioning. What little it has received is redirected to its branches in the remoter talukas where the requirement is more pressing.
The result is that it has no legal tender to disburse to its customers, and cannot even pay the salaries of its 975-member staff. Seven of its branches have already shut down. The bank’s management is besieged by calls from account-holders, but Dilip Patil, chairman of SDCCB, has no explanation to give them.
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“If the issue is that of money being laundered in account holders of DCCBs, then we are open to scrutiny,” he says. “There is no problem with our KYC or compliance issues.”
“Our crop loan requirement is Rs. 400 crore,” says B.S. Ramdurg, SDCCB’s managing director. “With the onset of the rabi season, credit is sorely needed for farm inputs and paying labourers. Besides crop loans, we cater to the salaries of primary school teachers, aanganwadi workers and the disabled who receive money under the Sanjay Gandhi Niradhar scheme.”
“It is inconceivable,” Mr. Patil says, “that those in Delhi are not aware that in rural India, besides money for agricultural matters, farmers withdraw a lot of cash before and after Diwali for a variety of reasons, be it for the purposes of marriage or education. Few use the Kisan Credit Card, contrary to the Centre’s claims.”
Grassroots problems
Across the district, across income groups and social strata, The Hindu heard variations of one theme: “We are not against the drive, but we feel the procedure is thoroughly defective.”
“I have Rs. 10 lakh in my account, but am unable to withdraw in order to pay-off farmers and labourers in my chain,” says Rajaram Shinde, a prosperous dairy farmer from the district’s Jath Taluk, and president of a milk cooperative.
For the less affluent, the outlook is direr. Vasant Koli, who owns a modest two-acre sugarcane crop in the village of Inam Dhamni, says “My farm will yield 16 tons of sugarcane, which I expect to earn Rs. 35,000. But 70 per cent of this will go off to repaying my farm loan and electricity bill.”
His household is surviving on the milk yielded by two buffaloes. But with no money to buy fodder, they are despairing.
His wife, Ranjana Koli, says, “Rs. 8,000 has been credited to my account, which is linked to the SDCCB through the cooperative I’m part. But I cannot withdraw it owing to the RBI ban. Besides, the bank itself has no money.”
Like many other families in the district, the Koli family surviving on barter. This is not unusual.
Though Sangli is among the more prosperous districts in Maharashtra, there is just not enough infrastructure for its people to be able to rely on the banking system.
Loss of trust
Mr. Patil of SDCCB says that the sentiment is increasingly taking root that the Centre’s move is turning into a wild goose chase; the real black money hoarders are going scot free while the poor are forced to stoically endure hardships in endless queues outside banks. And then there is the steady erosion of trust.
“Our credibility has taken a massive beating,” Mr. Ramdurg says. “We fear our account holders will be compelled to shift their banking if the crisis persists.” He says that despite presenting its case with the RBI, there has been no relief.
“Is the RBI ban a move to break the back of cooperative banking system and shift banking to nationalised banks?” asks Mr. Patil.
“If so, it is impossible to supplant the cooperative banking system overnight as nationalised banks, far less private ones, do not have the requisite infrastructure to reach out to the rural poor. The prolonged crisis will significantly damage the financial health of the rural economy.”
On December 3, SDCCB’s entire management and staff, along with many account holders, will be taking out a protest march against the ban and will present their grievances to the Sangli District Collector.