Vol. XL No. 48 November 27, 2016

Allow Cooperative Banks to Exchange Demonetised Notes: BEFI

THE Bank Employees Federation of India (BEFI) has appealed to the finance minister to ensure that cooperative banks including primary agricultural cooperatives are permitted to exchange old Rs 500 and Rs 1,000 notes to mitigate the sufferings of the rural populace, particularly peasants.

BEFI general secretary Pradip Biswas, in a letter to finance minister Arun Jaitley on November 17, said the Reserve Bank of India’s decision barring District Central Cooperative Banks (DCCBs) and other cooperatives from exchanging and accepting demonetised notes has landed the rural people, particularly the peasantry, in total disarray and they are not in position to sell agricultural products and procure essential commodities to meet daily needs.

“Primary Agricultural Cooperatives (PACs) and other cooperative institutions deposit their surplus cash mainly with DCCBs. There are around six lakh cooperative institutions, of which 93,042 are primary agricultural cooperatives and around 5 lakhs are non-agricultural credit societies. The total membership of all the cooperatives taken together is around 25 crores… In a situation when only 15 per cent of six lakh-odd villages of our country are covered by branches of commercial banks and Regional Rural Banks, farmers and other common people in rural areas maintain their account with cooperative banks only and cooperative banks are the only institutions for the rural people to deposit and exchange the demonetised currencies,” he said.

The decision of GoI/RBI is adversely affecting 20 per cent of the most deserving section of our society, he said and demanded immediate withdrawal of the restrictions imposed on DCCBs in the matter of acceptance of demonetised currency notes and immediate and effective measure for provision of sufficient quantity of new currency notes, more particularly Rs 100 notes, to the banks as also input of the same to ATMs so as to mitigate the hardship of the common people caused by the ill-advised demonetisation announced by the Prime Minister on November 8.

The BEFI said, “Despite best cooperation extended by all sections of employees in commercial banks, cooperative banks, Regional Rural Banks and Regional Offices of the Reserve Bank, the acute problem faced by the commoners across the country could not be substantially mitigated. The management of various banks have felt the brunt of acute staff shortage and to meet up the situation they have been instructed by the Reserve Bank of India to deploy the superannuated staff in respective commercial banks since November 9, 2016. The various jobs and function of commercial banks have severely been pruned and the overall functioning have only remained confined to deposit and exchange of old currency notes to the banking customers.”

In the absence of currency notes of higher denominations, the sudden burst of demand for Rs 100 notes are not being addressed to as the productive capacity of note printing presses have acute limitations. We apprehend that even if the productive capacities of the printing presses are fully utilised, the shortage in supply of notes will continue to persist leaving the people in distress. Taking this as an alibi, the government may plan to resort to import of printed currency notes from abroad, as was grossly done decades back from South Korea. This will bring the country back to old position and such attempt will obviously be exposed to grave security risk of counterfeiter. The current exercise of RBI, without proper currency backup, to implement a political decision of the government, has messed up the entire currency system of the country, it said.

Since the beginning of this century, RBI has been endeavouring to popularise its clean note policy for which it took various drastic measures during the last 15 years or so. For the sake of common users handling fresh currency notes, the support lent by the entire workforce of banking industry helped RBI achieve the objectives of its clean note policy to a considerable extent. But now, because of the acute shortage of notes, RBI is left with no alternative but to reissue the non-issuable and soiled currencies into the system and the relatively clean currency system will be substantially flushed with soiled currencies thus the clean note policy of RBI is going to be defeated, we sincerely feel. The 15 years of extensive and intensive exercise of banking industry at the instance of RBI is going to be wasted.

“We, therefore, demand of the central government and the Reserve Bank of India to ensure adequate supply of currency notes of Rs 500, Rs 100 and Rs 50 denominations immediately and we urge upon the respective bank managements to provide adequate manpower to deal with the situation and serve the constituents with legitimate possession of demonetised currency notes,” Biswas said, adding that “the present crisis has once again upheld our contention for adequate recruitment at all cadres in all the banks as well as the superiority of brick and mortar banking for withstanding any crisis in the system.”