DCCBs allowed to deposit demonetised notes with RBI

The government on Tuesday allowed the RBI to accept demonetised notes collected by District Central Cooperative Banks (DCCBs) immediately after the note ban, a long-time demand of the BJP's ally Shiv Sena.

The gazette notification came on a day the Shiv Sena made a U-turn and announced its support for the NDA Presidential candidate Ram Nath Kovind, just one day after saying that his choice amounted to caste appeasement. 

Maharashtra minister Diwakar Raote of the Shiv Sena had demanded last week that over Rs 2,770 crore in junked notes lying with the DCCBs be accepted by the Reserve Bank of India (RBI). 

The exchange, he had said, could enable the district banks to offer fresh loans to farmers in the current crisis situation in the state.

Maharashtra's district cooperative banks had Rs 2,771.86 crore in old notes as of March 18, 2017. The figure was Rs 5,458.59 crore on November 14, 2016. The demonetisation was announced on November 8 night.

The DCCBs were barred from accepting the old notes after November 14.

The gazette notification says the DCCBs can now deposit the demonetised currency, collected during the five days between November 10 and November 14 after demonetisation, within a month starting on Tuesday. 

Also on Tuesday, former Finance Minister P. Chidambaram suggested that the decision on DCCBs may be linked to the Shiv Sena backing for Kovind, a former Bihar Governor.

"Was the midnight notification perfectly timed with garnering support for Presidential candidateIJ" the Congress leader tweeted.

The notification also allows banks and post offices which had collected demonetised currency prior to December 30, 2016 to deposit them with the RBI.

The deposits can be made under Specified Bank Notes (Deposits by Banks, Post Offices and District Central Cooperative Banks) Rules, 2017.

The notification by the Department of Economic Affairs says the demonetised notes of Rs 500 and Rs 1,000 may be deposited by "such Bank, Post Office or District Central Cooperative Bank, as the case may be, in any office of the Reserve Bank, within a period of 30 days from the commence of these rules, and get the exchange value thereof by credit to the account such Bank, Post Office, or District Central Cooperative Bank, as the case may be, subject to the satisfaction of the Reserve Bank of the conditions specified in the said Notification and the reasons for non-deposit of the specific bank notes within the period under that notification". 

Officials said the deposits would be accepted in pursuance of an assurance given to the Supreme Court by the government that proper verification of each account would be done before any decision was taken.

Such a verification was done between January and May this year and it was found that the accounts complied with the Know Your Customer (KYC) norms, the officials said.

The Shiv Sena, which had been sulking over various issues and had demanded that RSS chief Mohan Bhagwat or eminent agricultural scientist M.S. Swaminathan be declared the Presidential candidate, declared its support to the NDA nominee on Tuesday evening.

On Monday, Sena chief Uddhav Thackeray had slammed the move to field Kovind, saying it was meant to appease caste sentiments because of his Dalit origin. But the party made a U-turn on Tuesday.