Relaxing norms to exchange demonetised notes may trigger more demands from ppl

The government's surprise announcement on the midnight of Tuesday to allow district cooperative banks to exchange demonetised currency notes of Rs 500 and Rs 1000 with the Reserve Bank of India may trigger more such demands from citizens still left with old bills.

The government had set December 30 deadline for exchanging junked notes barring some exigencies for which the window was open until March 31 only with RBI.

However, much after the deadline, the RBI officials kept getting requests from individuals who failed to exchange the junked currency in time. Most of the requests came from students who accidentally found demonetised notes inside cupboards or in their books.

"There is a ray of hope that the RBI may open a small window for this category too," a government official said, however, he was not too sure of the move especially after the government issued an ordinance to penalise people holding junked notes in excess of 10.

Another official said the government may have allowed the exchange facility to cooperative banks because it would help states to deal with farm loan waiver. Many states had been demanding such a relief in absence of Centre coming forth with financial support.

The Shiv Sena last week vociferously demanded that the RBI exchange old notes close to Rs 2,772 crore for new ones in central cooperative banks which were worst hit after demonetization. 

As the Centre's announcement coincided with Shiv Sena extending support to NDA's Presidential candidate Ram Nath Kovind, the Opposition Congress asked if Sena's pressure worked on this.

Senior Congress leader P Chidambaram said, "was the midnight gazette notification perfectly timed with garnering support for the Presidential candidate?"

Six days into demonetisation on November 14, the RBI had banned cooperative banks from exchanging scrapped Rs 500 and Rs 1000 notes. It had also asked these lenders not to accept junked currency notes as deposits. Though the RBI did not give any reason for its directive, it is believed that money laundering suspicions forced the bank to do so.

States like Kerala, Andhra Pradesh and Maharashtra where cooperative banks are actively involved with providing credit to farmers, have since been asking the Centre to relax certain norms to help affected farm sector.

Kerala Finance Minister Thomas Isaac had even said that cooperative banks in the state have Rs 90,000 crore in deposits and Rs 75,000 crore in credits. The deposit-credit ratio at 80% is much higher than the state's largest nationalised bank, State Bank of Travancore.