About 7 lakh customers of coop banks, including farmers, have been affected by the cash crunch.

Farmers cannot access credit veggie prices may go up Siddaramaiah tells Jaitley
news Demonitisation Tuesday, November 15, 2016 - 12:10

Karnataka Chief Minister Siddaramaiah has written to Union Finance Minister Arun Jaitley, seeking an extension on the deadline to use the withdrawn currency notes as it was affecting access to health care, credit and farm credit.

In a letter dated November 14, Siddaramaiah wrote that he was making a few suggestions based on a review of the situation on the ground in Karnataka. Stating that people had been inconvenienced greatly by the suddenness of the withdrawal, Siddaramaiah said, “This is primarily on account of the fact that the banking system does not appear to have been geared up to this mammoth task given to them.” He said that practical measures could have been put into place in advance.

He made the following suggestions:

Stating that access to health care was being affected, Siddaramaiah said that along with government hospitals, private hospitals, blood banks, diagnostic hospitals, also be granted exemption in using the old notes. 

Pointing out that the introduction of Rs 2,000 notes, without Rs 500 notes meant that “there is no currency available in the market between Rs 100 and Rs 2,000 today”. He urged Jaitley to introduce Rs 500 denomination notes at the earliest.

Siddaramaiah urged that the old notes be allowed for exempted categories until December 30 as the exchange of notes was allowed until this period anyway. 

He said: “It is requested that the benefit of payment using old currencies may be allowed to all other categories of consumers like petty and small commercial establishments and industries as it is payment for the services actually consumed.” He also urged that advance payments be allowed where existing rules allow for it. 

Siddaramaiah said that cooperative banks were dependent on commercial banks for their cash requirement. They require Rs 500 crore for banking transactions, but had received only Rs 25 crore in the past five days. The cash crunch had affected nearly seven lakh farmers and customers. 

“I request you to direct the concerned to increase the cash supply to cooperative banking sector as per their requirement.” 

He also said that there are markets in the state with a daily transaction volume of Rs 150-200 crore. He noted that small and marginal farmers receive payment largely in cash from traders and commission agents and that they had not been able to get their payments on time. He said that this situation might affect the supply and prices in the near future. He requested that the minimum withdrawal limits for registered traders and commission agents of the APMC be increased to pay small and marginal farmers on time. 

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