Farmers and traders are severely hit in Gujarat as there is not enough cash in cooperative banks. Farmers repay their loan in March and new loans are disbursed in April, bankers said. However, RBI is not releasing cash in sufficient quantity and loan disbursement has been affected adversely.
Gujarat Urban Cooperative Bank Federation (GUCBF) said in a press release that Rabi season is going on and farmers need to be paid in cash. However, Urban Cooperative Banks do not have sufficient cash and so farmers and traders are facing a severe shortage of cash. "Farmers are coming to markets to sell wheat, castor, cumin and other crops. They need to be paid in cash, which is in short supply with UCBs," GUCBF said in the statement.
Same is the case with District Central Cooperative Banks (DCCBs) which operate in rural areas. "We are told that RBI has not released enough cash to cooperative banks. We sought money from SBI, Bank of India (BoI) and other nationalized banks. But we are told that even they are short of cash," said Nanubhai Vaghani, chairman of Bhavnagar DCCB. He explained that in order to get interested subsidy, farmers repay their loans by March 31. These loans are again sanctioned to them in April. "Banks can store cash in only limited quantity with them. The rest has to be returned to RBI. Now after getting the cash, RBI says that there is not enough cash," said Vaghani adding that while he has somehow managed the situation in Bhavnagar, the situation in northern districts of Banaskantha, Sabarkantha and Mehsana is severe. "We have complained to Gujarat State Cooperative Bank (GSCB, the apex body of all DCCBs), but no corrective action has been followed up," he added.
However, officials of GSCB said that this is not for the first time that cash is in short supply and the motive is to promote digital transactions in villages. "Even in the previous year, RBI did not supply cash in enough quantity. The idea is to promote the use of Kisan Credit Cards," said Ajay Patel, chairman of GSCB. But lack of availability of infrastructure in rural areas is a major bottleneck.
Sources in bank unions are not sure about the reasons, they presume that this is because, RBI is replacing high denomination currency notes will lower denominations of Rs200 and Rs50, which is a time-consuming process and also has storage bottlenecks as smaller denomination notes require more space than higher denomination notes. Another office-bearer of employees union said that he has got reports of banks not having enough cash. He feared that if this is the case, then the availability of cash is ATMs will also be affected. However, another office-bearer said that shortage is restricted to villages, while urban areas are not facing the crisis.
RBI reducing Rs 200 notes supply
Sources in bank unions are not sure about the reasons. According to several staff RBI is replacing high denomination currency notes and it will lower the release of notes with denominations of Rs200 and Rs50, which is a time-consuming process and also has storage bottlenecks as smaller denomination notes require more space than higher denomination notes.
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