Monday, January 2, 2017

Under I-T, ED watch: Pune cooperative banks running low on cash and confidence

2 January 2017

PUNE: More than 50 days have passed since Prime Minister Narendra Modi announced demonetisation of old currency notes but the cooperative banking sector is still reeling under its effects. Lack of cash availability and increased surveillance in terms of raids/surveys by various investigation agencies has inflicted a sense of uncertainty in both the District Central Cooperative banks (DCCB)s and the Urban Cooperative banks (UCB)s.

Since demonetisation, the 31 DCCBs and over 500 UCBs in Maharashtra had been under the radar of the Income Tax Department and the Enforcement Directorate. Both the agencies had been focussing on these banks to check for any exchange of black or unaccounted-for money.

The I-T department, in particular, was interested in scanning the details of the transactions carried out between November 10-14 at the DCCBs. The Reserve Bank of India (RBI) had debarred the DCCBs from exchanging or depositing old currency notes post November 14. Rs 4,700 crores accumulated in the DCCBs are yet to be remitted. Although the Supreme Court had allowed the amount to be remitted, lack of clear guidelines from RBI has delayed the process.

As the DCCBs wait for the resumption of their normal banking duties, they seem to have come under the I-T scanner. I-T officers have confirmed that they had been receiving directions to conduct searches and raids at the banks. The searches were, invariably, related to the amount deposited at the DCCBs during the first four days of demonetisation. In December, both the Snagli and Satara DCCBs were inspected by the I-T Department to check details about such deposits. Sources from the department had said that similar raids are in the offing.

Pune, Satara, Sangli, Thane, Mumbai DCCBs had seen more deposits than other banks. As per the guidelines of the NABARD, the DCCBs had submitted the KYC details of their accounts and were awaiting verification.

BJP MLC Pravin Darekar, who had moved the Supreme Court regarding the ban on DCCBs, compared these raids to a trial by fire. “Banks that have nothing to hide need not fear about the raids. It’s a trial by fire for them but I am sure they will come out of it well,” he said.
Darekar, however, agreed that the present situation may harm the reputation of these banks, which have an extensive network in rural areas.

Like the DCCBs, the UCBs had also been hit by demonetisation with lesser availability of cash and increased surveillance. The I-T department had already raided two banks to check the amounts deposited and more such raids are in the pipeline. Bankers said that a recent circular has compelled them to provide details of higher value transactions by 1.00 pm every day.

Vijay Dhere, president of the Pune Union of UCBs, said that after a persistent follow up with RBI they had received just 25 per cent of their currency demand. “We hope the situation improves soon,” he said.


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