Cooperative banks still feel the pinch of note ban

The trauma of running from one closed ATM to another for cash may be over for most city dwellers, but the agrarian economy — dependent on cooperative banks — is yet to recover from the impact of demonetisation. The District Central Cooperative (DCC) banks, that are a federation of village-level cooperatives, have had low recovery as farmers, their biggest clients, have no cash in hand. Till March 15, sources in the Karnataka State Cooperative Apex (KSCA) Bank, which gives loans through the DCC banks to farmers, said it had recovered only nearly 86% of about ₹10,300 crore of farm loans disbursed for the last kharif season. ‘Banks crippled’ “This has crippled DCC banks and village-level primary agriculture cooperatives. It has also affected the functioning of milk cooperatives. But the Union Finance ministry, which refunds the money spent by cooperatives in loans and advances, is yet to understand our plight,” Bidar DCC Bank president and a member of the apex bank’s governing board, Umakanth Nagamarapalli, told The Hindu. On an average, DCC banks and their subsidiaries disburse 60% of the crop loans and other rural advances. If they are hit, the whole rural farming community would be affected, he said. “This has led to a strange situation where we are unable to disburse the crop loss compensation under the Pradhan Mantri Fasal Bima Yojana to farmers,” Mr. Nagamarapalli said. Cash flow disrupted during demonetisation is yet to be normalised in the 21 cooperative institutions that cover the 30 districts in the State. Lead bank and Cooperative Department officials in the nodal districts confirmed this. The five biggest banks — the South Canara DCC (SCDCC) that operates in Dakshina Kannada and Udupi; Belgaum DCC, Bijapur DCC, Bagalkot DCC, and Bidar DCC — are getting only 25% to 30% of cash that they need on a daily basis. “We need around ₹3 crore to ₹6 crore. But we are getting only between ₹60 lakh to ₹1 crore a day,” Mr. Nagamarapalli said. “We are not getting enough money from the local Reserve Bank of India currency chest either,” said Rajendra Kumar, SCDCC Bank president. ‘Taking risk’ “We are transporting money from the RBI chest in Bengaluru on our own. We are bearing the cost of transportation and security, and transporting currency notes at our own risk,” he said. At ₹4,000 crore a year, the SCDCC Bank has a daily transaction of ₹11 crore. Accepting that at least half of that should be internally generated, he said, “We need cash infusion of ₹5 crore a day. But the local chest is offering us only ₹6 crore to ₹8 crore a week,” he said.

DCC Bank managers in Hassan told The Hindu that as opposed to at least 10 deposits a month, now they hardly get two or three.

Source: The Hindu