Kerala seeks demonetisation exemption for Co-operative sector

CPI(M)-led LDF government in Kerala today asked the Centre to allow district Co-operative banks and primary agriculture credit society (PACS) to exchange defunct notes, saying any disruption in the sector would result in irreparable damage to state's economy.

"We have brought this issue to the notice of Union Finance Minister Arun Jaitley and also RBI authorities," Minister for Co-operation A C Moideen said.

Moideen in a letter to Jaitley said there was no reason to distrust the District Co-operative banks as it was functioning as per RBI norms.

Referring to the problems faced by PACS, he said at present, PACS were getting only Rs 10,000 per day subject to a maximum ceiling of Rs 24,000 per week from banks.
 

"PACS may therefore be exempted from the cash withdrawal ceiling," he said.

It was also pointed out that PACS were the backbone of the village and agricultural population in the state and they depend on the 1551 PACS for their day-to-day cash needs and so "these societies requires liquidity".

Kerala Chief Minister Pinarayi Vijayan and state Finance minister Thomas Issac during their meeting with Jaitley yesterday had urged for giving service cooperative banks and state's treasury the status of banks.

On the allegation that Co-operative sector has been used to money laundering, Moideen said it functions as per norms and rules.

The banks have the ID cards and other details of depositors and customers, he said.

"We are not against any inspection by IT officials. If there is any tax evasion, let the IT department act as per law," he said.

He also alleged that there was a "deliberate" attempt to destroy the Co-operative sector in the state with a view to help the private banks.

Meanwhile, financial expert and former head of Economic Department at Kerala University Mary George said opposition against demonetisation of Rs 500 and Rs 1,000 currency notes was politically motivated.

"There is no base for their objection", she said.

Cooperative banks have 50 days' time to exchange their notes but if they approach banks for exchange of currency, they would have to reveal their 'real turnover' and other particulars. "They do not want that because most of them are involved in under-reporting," she alleged.