DNA: Mumbai: Tuesday, January 17, 2017.
The Reserve
Bank of India (RBI) did not have a single case or information related to
"irregularities" against any district cooperative bank when it banned
exchange and deposit of old currencies at such banks following demonetization.
In a reply to
an application under Right to Information Act 2005, the banking regulator has
stated it has no data or information available with regards to irregularities
committed between November 8 and December 10 in the district or state
cooperative banks.
On November
14, barely a week after the announcement of demonetization on November 8, the
RBI had barred district cooperative banks from accepting or exchanging the old
Rs 500 and Rs 1,000 notes. The abrupt decision led to distress and panic among
millions of farmers and rural population, whose only access to formalised
banking continues to be through these banks' network in the rural parts of the
country.
The regulator
could not provide a single case against any district or state cooperative bank
in its response dated January 9. Regarding urban cooperative banks, the central
bank's information officer A G Ray said it would be provided by another
department of the RBI.
"The RTI
response affirms the Narendra Modi-led BJP government had overturned its
decision of allowing note exchange and handling of new currency in cooperative
banks, within six days of demonetization, based on 'unsubstantiated' accusation
of money laundering in these banks. This arbitrary decision affected crores of
farmers and rural population," said RTI activist Anil Galgali, who sought
the information from the central bank on irregularities and scams detected in
those cooperative banks across India between 8 and 14 November 2016.
"The
RBI's arbitrary decision dented our image to some extent besides creating panic
and pain among farmers in those tough days. Many of our customers are forced to
open accounts in public sector banks so as to deposit their old notes they
usually keep at home for emergency purposes," said an official from a
Thane cooperative bank.
Rural
economies in Punjab, Gujarat, Uttar Pradesh, Maharashtra, Kerala, Odisha and
many other states depend heavily on cooperative banks. Farmers rely largely on
these banks because of their penetration and easier loan disbursals. In Kerala,
cooperative banks have total business of more than Rs 1 lakh crore.
"While
some cooperative banks are accused of irregularities and scams, a blanket ban
(over old notes acceptance and exchange) on these banks mere on hearsay only
highlights how clueless the banking regulator was in those 50 days," said
a professor of economics at Mumbai University.