Demonetisation: Kharif farmers hit hard after RBI forbids DCC banks from accepting old notes
MUMBAI: An RBI circular banning District Central Co-operative banks from accepting old currency has hit Kharif farmers in Maharashtra, who were looking to pay off their crop loan dues with the now-defunct notes, thus affecting recovery worth Rs 12,000 crore across the state.
The farmers who have started selling their Kharif produce are mostly paid in cash by wholesale traders. Now, the amount with farmers (mostly in denominations of Rs 1,000 and Rs 500) is rendered useless for crop loan payments.
“There are 31 District Central Co-operative (DCC) banks that have a huge network in rural areas (of Maharashtra) and are used as a gateway for rural funding, including crop loans and other lending. Most of the farmers have their bank accounts with such banks and at the end of every (crop) season, they deposit the money there and repay their loans.
“This has been the practice for more than four decades, which has now suffered a jolt with the decision of barring DCC banks from accepting Rs 1,000 and Rs 500 notes,” Hasan Mushrif, Chairman of Kolhapur District Central Co-operative Bank, told PTI today.
Pramod Karnad, MD of Maharashtra State Co-operative Bank said, “Kharif crops generally mature by October and within a couple of weeks, it is ready for sale. Now, farmers who wish to payback their crop loan early so that they become eligible for fresh loans, are stuck.
“There should have been some provisions so that farmers can pay back their Kharif crop loans. The move has affected crop loan recovery worth Rs 12,000 crores across the state,” he said.
A senior officer from another DCC bank said that traders do keep some cash with them for daily purchase of grains and pulses in large quantity.
“Some amount of their actual trade always remains unaccounted. The demonetisation move has prompted traders to distribute defunct currency notes on priority, chiefly to farmers in form of purchase price,” he said.
“Farmers had assumed that they could deposit the same currency notes into their DCC bank accounts and repay their loans. Many farmers are now left in the lurch as nobody is accepting the scrapped notes, including fertiliser and pesticide vendors besides farm equipment sellers and others,” the officer said.
Raghunath Patil, a senior leader of farmers’ organisation from Sangli, said DCC banks were the backbone of rural economy in Maharashtra.
“Such a decision of banning DCC banks is certainly anti-farmer. It also shows the approach of the Union government towards rural populace and farmers,” he said.
SOURCE: ECONOMIC TIMES