The co-operative sector in Kerala that has financial dealings worth Rs 1 lakh crores virtually came to a halt after demonetisation.

Keralas co-op sector thriving due to public not black money say employeesImage for representation
news Banking Friday, November 18, 2016 - 18:25

Friday saw Kerala Chief Minister and his cabinet colleagues stage a protest in front of the Reserve Bank of India in Thiruvananthapuram against the RBI’s ‘discriminatory ban’, preventing Cooperative Banks (DCB) from accepting demonetized currency notes of Rs 500 and Rs 1000.

The co-operative sector in Kerala which has financial dealings worth Rs 1 lakh crores virtually came to a halt with what the Left terms a ‘deliberate’ move to cripple the state economy.

Speaking to The News Minute, AI Varghese -former GM of the Ernakulam District Co-operative Bank says that rumours about black money being laundered through the co-operative sector is at the end of the day…just a rumour.

“Kerala is way ahead of its counterparts when it comes to how the state’s co-operative sector banks function. Virtually every DCB has the Infosys ‘Finacle’ core banking solution installed in all its branches. One cannot just walk in and pre-date Fixed Deposits, just because someone asks you to,” Varghese scoffs.

“The Ernakulam District Co-operative Bank came into existence in 1984. Its license was issued by the RBI under a given set of policy guidelines. All DCBs have a proper system in place, wherein they are answerable to Enforcement directives, ‘Know Your Customer’ (KYC) rules, apart from being under the eye of the RBI. They also have access to the latest technology to identify fake notes as well as imitation gold ornaments. The system cannot be easily taken for a ride,” he continues.

In the last few years, there have been attempts to bring co-operative banks under scrutiny of the Income Tax department, but that was staunchly opposed. Politicians belonging to the BJP and others like PC George have accused that a lot of money in co-operative banks was unaccounted for.  

Set up under the Kerala Co-operative Society Act, it is the village –Varghese says- that forms the basic unit of each primary co-operative society: “Everyone knows everyone else. All those who have deposits in the bank are actually known to the bank employees. You will not see a stranger walk up to deposit crores of money in these banks. I am not a millionaire by any stretch of imagination. But even after retirement I still prefer to continue banking in the state’s co-operative sector, because of the simple, bonafide system in place.”

According to Varghese, the co-operative sector in the state thrives primarily due to the massive support base that it enjoys among the common man and is equally popular among the rural and the urban folks. 

“The very idea of a primary co-operative society is to keep the procedures simple so as to make banking more widely accessible to one and all. That is what the RBI itself has spelt out in its guidelines for such banks. Then why the discrimination?” is what Varghese wants to know.

He even goes on to say that in the backdrop of the said move causing unnecessary hardship to the general public, people should actually resort to legal means to fight against such blatant prejudice against the DCBs.

Another official who works with the State Finance Department and did not wish to be named sees it as an ill-prepared move. “It is similar to someone draining out a clogged pond, but refusing to fill it up with fresh water. That is exactly what the Centre’s obstinacy is causing on-ground,” he rues.

An auto rickshaw driver who has been waiting since morning near the protest venue at Bakery Junction to pick up any passenger who would be willing to risk hiring his auto, given that none seemed to have small change to pay him, grimaces: “Instead of trying to sort out the issue, all they seem to do is keep making it even more difficult for the masses.”

Become a TNM Member for just Rs 999!
You can also support us with a one-time payment.