Co-op banks approach RBI as PSBs limit cash flow to them

Bankers have said the urban co-operative banks (UCBs) in the country are struggling with low-cash flow and, these lenders have written to the Reserve Bank of India to improve the money remitted to them.

"After the announcement of the scheme of withdrawal of legal tender of Rs 500 & Rs 1,000 notes, banks refused to provide currency support to our UCBs on November 10 treating us as 'general customers'. Later, in spite of issuance of circular by the RBI that the limit of Rs 10,000/- is not applicable to cash withdrawal from a bank account by one bank from another bank, the PSBs , especially State Bank of India, Bank of India refused to adhere to the request of UCBs," stated the Maharashtra State Cooperative Banks Federation in a release.

The statement also added that in the first few days the central bank had remitted some money to the co-operative banks but the cash flow has been drastically reduced in the last few days. These lenders complain that as a result of this cash crunch they have not been able to meet the customers withdrawal requirements.

There are 1,579 cooperative banks across the country and they have 10,000 branches and close to 3,000 ATMs and they constitute close to 4 per cent market share in the banking business mix of the country. The federation said that out of these banks, 52 lenders have been left with no cash.