It was yet another action-packed day at the Supreme Court this afternoon, where a transfer petition that had been filed by the Centre on demonetisation along with other related petitions came up in Supreme Court.
It was yet another action-packed day at the Supreme Court this afternoon, where a transfer petition that had been filed by the Centre on demonetisation along with other related petitions came up in Supreme Court. The issue of District Co-operative Banks also came up in Supreme Court today.
Attorney General Mukul Rohatgi stated in Supreme Court that there are problems in District Co-operative Banks pertaining to KYC compliance and that there is every possibility that tainted money will flow into the system. Therefore, he cautioned that it is not advisable for altering the status quo with only 14 days to go, as there will be major accounting issues. According to Attorney General Mukul Rohatgi, the possibilities of the abuse of such alterations/beneficial steps cannot be ruled out.
Raising concerns against the Centre’s demonetisation move and citing concerns of the District Co-operative Banks, Kapil Sibal, Senior Advocate, Supreme Court, made the following statements:
1. From the notification dated 08.11.2016 when the demonetisation decision was notified to 10.11.2016, no transactions could take place.
2. From 11.11.2016 to 14.11.2016, all co-operative banks could accept as well as deposit old currency notes.
3. However, from 15.11.2016, the district co-operative banks have been banned from transacting.
4. As a result of this restriction/prohibition, customers of co-operative banks are going to other scheduled banks. In other words, co-operative banks are losing their customers to scheduled banks.
Kapil Sibal, Senior Advocate, further argued that if the customers of co-operative banks were allowed to deposit in the scheduled banks, then would this not amount to converting the black money into white? Would this not defeat the very purpose with which the notification related to demonetisation was made by the Centre?
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Responding strongly to Kapil Sibal’s arguments, Attorney General Mukul Rohatgi stated that the District Central Co-operative Banks are not under the RBI but under the NABARD. Also, he pointed out that they had a poor level of automation and low order professionalism, due to which the Centre decided to exclude these cooperative banks from the post-demonetisation exercise of exchanging the scrapped currency notes for the new ones.
Further, Attorney General Mukul Rohatgi also relied upon a notification issued by the Ministry of Finance dated 14.12.2016 whereby the Central District Co-operative Banks will be allowed to deposit old currency notes subject to certain conditions.