'Kerala, Punjab, Maha topped in co-op bank deposits before ban'
Either the rural economy is extremely robust or farming is possibly the most lucrative of occupations. A staggering Rs 9,000-plus crore worth deposits were made in select district central cooperative banks (DCCB) across 17 states in a short span of five days from November 10–15 last month after demonetisation. Perennially ailing with accumulated losses and large NPAs, these DCCBs suddenly turned cash-rich as they mopped up a stunning 147 crore plus demonetized notes of Rs 500 and Rs 1,000 denomination. Days after this flow of deposits into politically-controlled financial outfits at the district level, policy-makers in the North Block and RBI stopped the DCCBs from accepting any more deposits of demonetised currency. However, the five-day-window from the date of demonitisation to the ban proved a godsend for those with connections in the DCCBs to convert their wealth into legit cash, say experts.
Dr. K.G. Karmakar, former managing director of NABARD, said, “For many years, DCCBs have been hunting grounds for politicians who open accounts in the name of farmers and use them for money laundering,’’ he said, adding, “It is impossible that a farmer, in any part of the nation, who survives on loans for every sowing season has so much cash stashed away."
’’Officials are particularly surprised about the deposits of over Rs 1,800 crore in DDCBs in Kerala, where agriculture is on the brink of collapse and the economy is largely driven by remittances from the Gulf.“ The DCCBs in Kerala mostly serve the small and marginal farmers and small businesses. It is worth investigating how these loan-dependent depositors suddenly turned rich and deposited Rs 1,810 crore in a matter of five days,’’ a top bureaucrat told TOI. Ditto in Punjab where the 20-plus DCCBs recorded a whopping Rs 1,268 crore deposits comprising banned Rs 500 and Rs 1,000 denomination notes.
Maharashtra, which has seen steady decline in the cooperative movement and politicization of district level banks, ranked third highest with its DCCBs securing Rs 1,128 crore between November 10 and 14. “Farmers in Maharashtra are consuming pesticide as they are unable to repay debts to loan sharks. These small and marginal farmers, who form the largest depositor base of the 31 DCCBs in the state, barely manage to provide for their families. The deposits reveal how the institution of the DCCB has once again been exploited by political overlords controlling them to convert their cash into white money,’’ a top official from the state agriculture department said. The data reveals that over the four days, DCCBs received Rs 9112.76 crores through deposits and an additional Rs 24.93 crore through exchange of demonetised currency. Interestingly, a major chunk of the notes deposited, as much as Rs 11.26 crore, were in Rs 500 denomination, while the number of Rs 1,000 notes deposited was worth Rs 3.48 crore.
Speaking of the RBI’s decision to ban these district cooperative banks from accepting demonetised currency, Karmakar added, “This was the best decision RBI could take as it not only curbed money laundering in these banks, but also the counterfeit money circulation. Many of these small banks do not have the facilities to identify counterfeit bills, which hikes the fraudulent activities further.”
Originally published at: https://goo.gl/A5BqO5