On 14 November, the Reserve Bank of India (RBI) issued a notification saying District Central Cooperative Banks (DCCB) will not be allowed to provide any exchange facility against Rs 500 and Rs 1,000. The diktat has caused near-collapse of rural Maharashtra as DCCB are backbone of rural economy.
The state has 31 DCCBs with 3746 branches across the state with over 20 lakh customers. Most of the customers are farmers, labourers, teachers, pensioners, self help groups, grampanchayat, development societies, patsanstha, cooperative societies of sugar, and milk, cotton and jaggery among others.
Backbone of rural economy
DCC banks are backbone of rural economy. PB Chavan, chairman, of Kohlapur DCCB, explaining vast presence of DCC banks, says, “KDCCB has accounts of all 27 sugar industries in the district, all 6000 milk cooperative societies, 36,000 self help groups, all 1807 agricultural centres, all 1187 grampanchats, all teachers and beneficiary of Sanjay Gandhi Yojna among others. Thus lakhs of farmers and farm labourers are directly or indirectly connected to above institutions and so with the KDCCB. With this ban, all businesses involving above institutions have come to halt. Out of all our 7.31 lakh accounts, 3.50 lakh accounts are of farmers. By not allowing us to exchange currency is punishment to them. Do you think these farmers can afford to or aware of having accounts in other banks like national or private banks?”
Sambhaji Patil is one of over 30,000 farmers who supplies sugarcane to Kumbhi Kasari Sahakari Sakhar Karkhana in Karveer Taluka of the district. He says, “I harvested 105 tonnes of sugarcane this season. On 2 November, I have sent that harvest to Kumbhi Kasari Sahakari Sakhar Karkhana, Kuditre, in Kohlapur. And the Karkhana has deposited one lakh rupees of sugarcane in KDCCB. Since KDCCB does not have received new currency, it is unable to pay me my due. In turn I could not pay wages to eight labourers who work in my farm.”
Natha Kumbhar, a labourer in Patil’s farm, has no money to buy grocery to run his family of four. He says, “My wife and I work as labourer to cut sugarcane in at Bele village in Karvir Taluka of Kohlapur. Both of us have not received our weekly wages that are Rs 1200 each. I have nobody to seek help of as I am a migrant from Marathwada.”
Strong rural presence of DCC banks.
DCC banks have strong rural presence against that of national or private banks. For example like Rajesh Tapre, managing director, Pune DCCB, informs, “PDCCB’s 221 out of all 261 branches are in rural Pune that has over 1800 villages while only 161 national banks branches have presence in rural Pune. With closure of DCCBs, all villagers from these 1800 villages have to travel 20-30 kilometres to reach closest national or private banks out of these 161 banks to exchange money. Their plights are beyond imagination if banks get closed or run out of money. In the process they have to skip their daily job or work causing them day’s wage or salary.”
After announcement of demonetisation on 8 November, many customers of these DCC banks deposited all of their notes of Rs 500 and Rs 1000 in their respective accounts on 10 and 11 November and could get Rs 4000 in return. Now, they do not have money to exchange in national/private banks and they are unable to withdraw money from their own account as DCC banks have limited funds.
Besides, DCC banks are given only Rs 2 crore daily. However a DCC bank has to give away at least Rs 20 crores. For example Kohlapur District Central Cooperative Bank (KDCCB) has to give away Rs 22 crore daily while its daily business revolves over Rs 100 crore. Officials of banks are in dilemma how to distribute only Rs 2 crore in its 191 branches. That means one branch would get only Rs one lakh. And banks are instructed to give Rs 25,000 to a family having wedding ceremony. Customers of banks are finding it difficult to get money from their own accounts.
Vijay Mhamane, a farmer from Malegoan village of Solapur district, says, “I have one bank account that too in Solapur DCC bank. I delayed to deposit amount I got after selling my Kharif harvest to traders at October end and November first week. I have to repay loans of the same bank I had taken for Kharif. Now have to travel to Barshi, nearby Taluka, to exchange notes and repay my loan in SDCCB.”
Vishwas Utagi, secretary of Bank Employees Association Maharashtra, criticises the decision of RBI, “DCCB are run as per RBI norms then why only DCCBs are not allowed to exchange notes. If black money is being converted in white in these banks as suggested by Finance Minister of India Arun Jaitley, then RBI can run an inquiry. To bank exchange of currency is illegal. It is punishment for over 20 lakh customers of these 3746 branches of DCC banks.”
Representatives of DCC banks of Maharashtra are in process to file public interest litigation (PIL) against RBI’s ban. They are also seeking other legal options to oppose the ban.