Banks refuse to disburse loans to farmers saying their old notes yet to be exchanged

Mumbai city news: Several district central cooperative banks says they have demonetised currency of around Rs3,000 crore, which the Reserve Bank of India has refused to exchange

Despite being directed by the state government to provide an interim loan of Rs10,000 to farmers, several district central cooperative banks (DCCB) have refused to disburse the loan. The banks said they don’t have money left.According to them, they have demonetised currency of around Rs3,000 crore, which the Reserve Bank of India has refused to exchange.

Seven days ago, the Maharashtra government had announced loan waiver for the 1.37 crore registered farmers in the state. It had decided to provide interim loan of Rs10,000 so they could begin sowing kharif crops.(For representation)

Seven days ago, the state government had announced loan waiver for the 1.37 crore registered farmers in the state. It had decided to provide interim loan of Rs10,000 so they could begin sowing kharif crops. It has been three days since the government has issued the directives to the banks.

The Rs10,000 interim loan will be part of the loan-waiver package, and will be adjusted against the final loan waiver that is likely to be announced in the coming days. The government has identified 16 district banks for giving interim loans but all have refused to budge. Former state revenue minister and senior BJP MLA Eknath Khadse, who controls Jalgaon DCC bank, said they don’t have money to give the interim amount to the farmers.

“The DCC banks don’t have any money left after demonetisation as their old currency is yet to be exchanged. Even if we assume DCC banks will have to give Rs 10,000 to only 50 lakh farmers, the amount go will into hundreds of crores, which is impossible to manage, considering liquidity issues. The DCC banks can give interim loans to the farmers only if government provides them money or RBI get them exchanged decommissioned notes,” Khadse told HT. Sources at Maharashtra State Cooperative Bank (MSCB), the apex body for all DCC Banks, confirmed that Rs 2,771.86 crore is lying with DCC banks in old notes.

State cooperation department officials confirmed that DCC banks have not started disbursing interim loans to the farmers. The state is trying to appoint DCC banks as representatives of nationalised or commercial banks. The nationalised and commercial banks will provide them liquidity, said a senior official..

State cooperation minister Subhash Deshmukh was not available for comment while SS Sandhu, additional chief secretary, cooperation department didn’t reply to our calls.