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CM objects to RBI order barring credits from DCC banks

Published On : 07 Dec 2016   |  Reported By : Courtesy : DHNS   |  Pic On: Photo credit : DHNS

Bengaluru, DHNS: Chief Minister Siddaramaiah has taken exception to the Reserve Bank of India’s (RBI) recent instruction to commercial banks not to accept any credits from district cooperative banks.

“I would like to know the reasons for preventing only the depositors of District Central Cooperative Banks from this facility now. I would like to know whether the RBI can, through a simple letter, withdraw a facility the Ministry of Finance give an order through a notification (sic),” the Chief Minister asked in a strongly-worded letter to Union Finance Minister Arun Jaitley.

Of the Rs 1,800 crore deposits that the DCC banks in Karnataka received (between November 9 and 14), about Rs 535 crore is yet to be credited to the commercial banks. Legal position of the balance amount with the DCC banks has become uncertain ever since the RBI gave the instruction, Siddaramaiah added.

‘Retrospective ban’

“The amount in question was deposited in the cooperative banks during the window that was made available to them till November 14, 2016. By not receiving this cash that was lawfully collected during this period, the RBI has created a retrospective ban on the facility that the Ministry of Finance notification had made available and that was to be allowed till November 14 by the RBI itself. I would like to be informed on the legal tenability of such a communication (sec),” he stated.

Siddaramaiah has sought to know the reason for imposing this restriction on only rural cooperative banks, while allowing urban cooperative banks to function.

‘Disastrous implications’

Such discriminatory policy on the farmers will have disastrous implications, he warned.

It is the third letter by Siddaramaiah to Jaitley. In the earlier two letters, he had highlighted problems faced by the farmers after demonetisation of high-value currency notes and urged him to take necessary steps to provide relief to the farmers.
He had, however, welcomed the demonetisation scheme.

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