The Supreme Court today refused to interfere with the government's decision to "forbid" district cooperative banks from accepting deposits and exchanging demonetised notes, saying it may require a detailed hearing.
"It is only upon acceptance of challenge to that decision, that the bar placed on the district cooperative banks can be lifted. We are not inclined to suspend that bar as an interim measure. This is especially when the decision is the outcome of financial policy which the respondents claim to have adopted on the basis of experience," a three-judge bench headed by Chief Justice T S Thakur said.
The bench, also comprising Justices A M Khanwilkar and D Y Chandrachud, noted in its order that an apprehension has been expressed about the possibility of demonetised notes being converted or exchanged without proper audit, control or supervision and they are not directly under the control of the Reserve Bank of India but within the purview of NABARD.
"The dispensation provided by NABARD is, according to the the Attorney General, not in conformity with the strict regime provided under the provisions of Banking Regulation Act, 1949 and the Reserve Bank of India Act, 1934," it said.
On the second aspect of district cooperative banks being precluded from utilising the demonetised notes deposited with them between November 11 to 14, the bench noted the submission of Attorney General Mukul Rohatgi who had said that as per his instructions, RBI has recommended that the notes may be exchanged after a 100 per cent audit of the veracity of the KYC documents of the customers is conducted by NABARD.
"For that purpose, suitable notification can be issued by the competent authority within two days. We commend to the competent authority to do so," it said.
The court also dealt with the contentions of the counsel appearing for district cooperative banks that RBI must assure that the entire amount offered by them for exchange after due verification will be duly replaced by commensurate amount of legal tender notes contemporaneously.
"The Attorney General on instructions submitted that the policy of replacement of legal tender notes as applicable to public sector banks and other banks will be applied even in the case of district cooperative banks for exchange of demonetised currency with the legal tender currency. We accept the assurance given by the Attorney General in this behalf," it said.
Disclaimer: No Business Standard Journalist was involved in creation of this content
