The business of the basic unit of cooperative movement PACS has come to stand still in the wake of latest RBI diktat in Kerala. PACS in state are in crisis as they are not allowed to do cash transactions exceeding Rs 20,000 as per the new rules issued by RBI, say media reports.
As a result of the new regulations, the business volume of PACS has considerably reduced, a source was quoted saying. Experts say the rural economy will seriously suffer if regulations and restrictions are imposed beyond a limit.
In the cooperative societies in Kerala, one of the main businesses is loan, including gold loan, and in many cases it would be to the tune of a few lakhs. With RBI’s new rule, such transactions are impossible and PACS are in crisis, say cooperative leaders of the state.
It is in this background that PACS want a licence to do financial transactions like district cooperative and urban banks, said a source closely associated with a PACS association.
Kerala which boasts of strong PACS structure came clean in the wake of govt asking details of customers with Rs 25 lakh or more as deposits. Not a single wrong-doer was identified, said district secretary of Kerala Primary Cooperative Societies’ Association (KPCSA) K Narayanan.