NAFCUB – the apex level promotional and advocacy body for the urban cooperative credit sector has made a move to help urban cooperative banks in the wake of the govt decision to demonetize higher currencies.
Responding to a query Subhas Gupta Chief Executive of NAFCUB said “yes, we are aware of the problem and in fact we have talked to RBI Deputy Governor who has promised to look into the issue”.
Both Gupta and Nafcub former CE D Krishna are currently camping in Mumbai to help sort out the issue. Earlier, Nafcub President Jyotindra Mehta wrote a letter to RBI detailing problems being faced by urban cooperative banks, said Subhas Gupta from Mumbai on phone.
Mehta in his letter to Deputy Governor Mr Vishwanathan has said “Most of the UCBs do not have accounts with RBI and the commercial banks are restricting their withdrawal to Rs 10,000 only. It is our submission that necessary directions be may kindly be issued to the currency chests branches.”
Talking about the credit co-ops Subhas Gupta said “We will take up the issue of credit co-ops next once the issues of UCBs are resolved.”
As majority of UCBs park money in commercial banks, they have the problem of meeting their members’ demand for cash. Following the RBI directive banks are treating majority of UCBs as an individual and even if a UCB has Rs 10 crore deposit in the bank what it can withdraw in a week is just Rs 20 thousand. This has led to a complete chaos.
There are not more than 40 UCBs which fall in the category of scheduled banks, according to a 2009 survey. The rest of them numbering 1500 are unscheduled.
Earlier, an Inter-Ministerial Group (IMG) had finalized a report according to which multi state co-operative and credit societies cannot accept deposits. IMG also recommended a whole slew of Legislative and Non Legislative Measures including legislation of a comprehensive Central law called the “Banning of Unregulated Deposit Schemes and Protection of Depositors’ Interests Bill” (Banning Bill).