Kerala Co-op sector in limbo after RBI bans exchange of demonetised notes at its banks

The Kerala Cooperative sector is up in arms against the RBI directive issued on Monday banning the exchange of demonetized currency notes of Rs 500 and Rs 1000 at the District Cooperative Banks (DCB).

The badly-affected sector observed a hartal on Wednesday to pressurize the Centre in this regard, terming it a deliberate move to cripple the state economy.

The protesting employees accused vested interests of spreading a ‘false’ rumour that the DCBs were being used to stash black money. 

The Chief Ministers of Kerala, Punjab, Odisha and Maharashtra have written to the Prime Minister asking him to intervene in the matter, so as to allow the public to deposit the demonetized currency notes at the DCBs.

Kerala CM Pinarayi Vijayan even called for a meeting in New Delhi on Wednesday where he met with all the Members of Parliament (MP) from the state to discuss the issue. It was decided that Kerala would present a united front in its fight against the Centre’s ‘discriminatory’ move targeting the cooperative sector. 

The group met the Union Minister for Agriculture and Cooperation Radha Mohan Singh to apprise him of the same. The MPs will raise the matter in the Parliament in the winter session that began on Thursday.

State Cooperative Minister AC Moideen also wrote to the Union Finance Minister Arun Jaitley to retract the discriminatory order, citing that the DCBs function as per prescribed RBI norms.

The Kerala CM also came down heavily on the Bharatiya Janata Party leaders for trying to mislead the masses, calling it a deliberate political ploy targeted against the state economy.

The money deposited in the DCBs was that of the common man, and not that of black marketers, Pinarayi reiterated. He was responding to state BJP president Kummanam Rajasekharan’s allegation that Kerala had to face a lot of demonetization ‘woes’ only because it happened to be a state where a luxurious, extravagant and a spendthrift lifestyle seemed to be the norm.

According to a report in The New Indian Express, such a move could also prove detrimental to Kerala Chief Minister Pinarayi Vijayan’s dream of a ‘Kerala Bank’ that the Left government hopes to constitute by merging all the DCBs in the state.

A Mathrubhumi report says that with the RBI order in place, daily financial transactions of around Rs 25,000 crores have come to a standstill in the state cooperative sector. The 14 DCBs in the state have at present 783 branches, while the 1604 Primary Cooperative Societies (PCS) have 4000 branches.

Deposits total Rs 60,000 crores in the state DCBs, while the PCS has a total deposit of around Rs 80,000 crores. If one considers the 60 Urban Cooperative Banks along with other cooperative societies, the sum total of deposits in the state cooperative sector comes to a staggering total of around Rs 1.8 lakh crores.