The repayment of around ₹2,000 crore farm loans in district central cooperative (DCC) banks will be affected in Karnataka following the RBI’s circular prohibiting them from accepting ₹500 and ₹1,000 currency notes from customers, according to the Karnataka Minister for Cooperation.
Speaking at the 63rd all-India cooperative week celebration in Mangaluru on Friday, HS Mahadeva Prasad, Karnataka Minister for Cooperation, said DCC banks in Karnataka were doing business in line with the provisions of the Banking Regulations Act. These banks have around 45 lakh deposit accounts and 21 lakh loan accounts. Hardly 25 per cent of 21 lakh loan accounts have accounts in other banks.
As DCC banks are not allowed to accept the ₹500 and ₹1,000 currency notes, farmers cannot remit cash in them.
Farmers who have taken loans from the cooperatives cannot repay the loans to the DCC banks. If they fail to repay within the due date, they would not be eligible to get interest subsidy provided by the government.
He said DCC banks in the state have disbursed farm loans to the tune of around ₹10,400 crore. Of this, around ₹2,000 crore was to be repaid between November 8 to the end of December. He said that they will also be ineligible to take further loans for the rabi crop.
The Karnataka Chief Minister, Siddaramaih, has written a letter to Finance Minister, Arun Jaitely, in this regard.
Stating that the RBI’s move will affect the cooperative institutions in the state, Prasad said the Karnataka government is expecting a favourable response from the Centre in this regard.