The finance ministry has done well to allow district cooperative banks to deposit the junked Rs 500 and Rs 1,000 notes they had with the Reserve Bank as they were struggling to meet farmers’ demands for loans. This is a crucial time for farmers to sow crops, for which they need loans from banks, which were asked to dispense a minimum of Rs 10,000 per person. It may be recalled that when the Prime Minister announced the demonetisation decision on November 8, 2016, the district cooperative banks had been kept out of the purview of accepting junked notes and only banks and post offices were allowed to do so. The reasoning was that people with black or unaccounted money were rushing to deposit them in such banks, just as they were also rushing to jewellers to convert these ill-gotten gains into gold. Demonetisation had taken out nearly 85 per cent of the currency in circulation at that time. In value terms, it amounts to nearly Rs 15 lakh crores. It’s still not known how much of this was remonetised and put back into the system as the RBI is still collating the numbers.
But there’s still a huge shortage of currency notes, more so in rural areas. People are still reeling under hardships, particularly those who get paid in cash and who have to dispense cash. The release of money by the cooperative banks, estimated at over Rs 5,000 crores, is expected to alleviate hardships, specially in rural areas. There is, however, the problem that such banks are few in number.
