Also asks Centre to respond by Wednesday if it could relax curbs on district cooperative banks
The Supreme Court on Friday asked the Centre if it can assure minimum guaranteed cash from banks across the country to every customer affected by its November 8 decision to ban Rs 500 and Rs 1,000 currency notes. It also asked the Narendra Modi government to respond by Wednesday if it could relax curbs on district cooperative banks from dealing with demonetised currency notes after imposing certain conditions.
A bench headed by Chief Justice TS Thakur told attorney-general Mukul Rohtagi that “when you fixed the cap at Rs 24,000 per week on your own, you must have checked if the system can take that burden, haven’t you?”
“See if you can fix a limit below which the bank manager can’t send you away or ration currency,” the bench asked the government when the senior counsel appearing for various petitioners informed it that that though the government said that each account holder can withdraw up to Rs 24,000 per week, the banks were instead giving them only Rs 5,000 to Rs 10,000.
The bench asked the attorney-general to seek instruction and apprise it about the stand of the government on issues including the bar on district cooperative banks from accepting deposits in demonetised currency notes. The next hearing is scheduled for December 14.
The bench also proposed to frame various legal questions to be deliberated upon on challenges to the demonetisation scheme including whether the November 8 notification is ultravires of Section 26(2) of the RBI Act and whether government had the power to restrict withdrawal of legitimate money by the public.
Senior advocate P Chidambaram told the court that “the issue of district cooperative banks and cap on withdrawals has nothing to do with achieving the government’s motives for demonetisation”.
He pointed out that even banks are facing shortage of funds and are not in a position to even disburse Rs 24,000 a week, in spite of government orders.
The senior counsel further said that all four printing presses of the RBI and the government can print only Rs 300 crore currency notes per month and replacing every demonetised note with a new note will take at least six months.
The former finance minister said that the government will take a minimum of five months to print the adequate number of notes in order to restore normalcy in bank to public transactions. He said that there is a serious rationing on withdrawal limits as there is a huge gap between the ban on old notes worth Rs 12 lakh crore and the injecting of new notes worth Rs 3 lakh crore only.
Rohatgi told the court that the government is not going to relax norms for district cooperative banks as the verification of money coming into such banks is not possible, because these accounts are not KYC-compliant. He said that there is serious apprehension as to whose money will come into these societies and who are the people managing these societies.