Kerala Assembly seeks authorisation to cooperatives to exchange demonetised notes

Assembly (file photo)Thiruvananthapuram: Kerala Assembly urged the Central government on Tuesday to allow the exchange of demonetised notes by all cooperative institutions in the State.

In a substantive motion adopted at the end of a four-hour long discussion, the Assembly said that Centre should appreciate the recognition and authenticity granted to cooperatives through 97th Constitutional Amendment and should not discriminate between cooperatives and the commercial banks.

The motion, moved by Chief Minister Pinarai Vijayan, described the measures taken by the Centre following demonetisation as ones creating instability and anarchy and weakening the cooperative sector which was one of the forces behind Kerala model of development. They negated equality before law under the Constitution.

It said that the notification issued by the Central government withdrawing Rs. 500 and Rs. 1000 notes as legal tender had created a situation whereas the district cooperative banks and primary credit societies stood fully excluded from financial transactions. This surprising policy of the Centre had wrecked the cooperative sector and caused hardships to the common man.

The cooperative sector in the State was all-encompassive, touching upon all sectors. It was an example to the country. About 60 per cent of the deposits mobilised by cooperatives in the country was in Kerala. The State, district and primary cooperative banks in the State had 3.51 crore accounts and deposits totalling Rs. 1.27 lakh crores. The outstanding advances came to Rs. 1 crore.

It was the artery of financial transactions of all sections of the people in the urban as well as rural areas in the House. The House hoped that the guarantee for deposits extended by the State government would increase the credibility of the cooperative sector, it added.

Earlier, intervening in the debate, Finance Minister T. M. Thomas Isaac said that the cooperatives, which hold Rs. 37000 crores in deposits with nationalised banks, were not being permitted to withdraw even Rs. 25000 a week or pay similar sums in cash to its depositors. The cooperatives were also unable to sanction loans and make payments.

Besides, private commercial banks were canvassing deposits from clients of cooperative banks saying that they would pay Rs. 24500 a week if they transferred their money by draft or cheque to accounts with them.  

BJP member O. Rajagopal, who was the sole member to oppose the motion, said that broad opposition to demonetisation for political reasons was not acceptable.  If there were specific issues like inability to make withdrawals, that could be taken with the Centre by the State government.

The Chief Minister intervened to say that the State government had indeed taken up the issue with the Centre directly. Though the Union Finance Minister Arun Jaitley appeared to favour the demand by the State, the notification issued by the RBI cancelled even the permission granted to district cooperative banks to exchange notes.

For further reading:

Special session of Assembly discusses crisis in cooperative sector