UP cooperative banks took old currency in breach of RBI fiat

The Ghaziabad District Cooperative Bank (DCB) accepted deposits of about Rs 78 crore in scrapped currency though it was not authorised to do so, a former bank official said on Tuesday.

According to Krishna Vir Sirohi, a former Chairman of DCB Ghaziabad, this was in violation of Reserve Bank of India (RBI) rules barring cooperative banks from dealing in the demonetised Rs 500 and Rs 1,000 notes.

But DCB Ghaziabad continued to accept deposits in the banned currency and issued valid money in exchange, he said.

Upendra Saraswat, Chief Executive Officer of DCB Ghaziabad, told IANS that it was a routine business of a bank to accept deposits.

He said that on several occasions, the RBI notifications reach the banks late. "In routine anticipation, we accepted the discarded currency," he said.

"We did it since we possess the bank licence issued by the RBI. If any violation is found, the RBI has the power to take action," he added.

Sirohi alleged that people "converted thousands of crores (of rupees) of black money into white through cooperative banks".

"When I came to know that the Simbhaoli branch of DCB Ghaziabad opened its branch at night from 8 p.m. to midnight (on November 8) and took deposits of scrapped notes, I complained to the District Magistrate in Hapur," he said.

The District Magistrate has reportedly ordered an inquiry.

"Almost all District Cooperative Banks in the state accepted the old currency of Samajwadi Party leaders," Sirohi alleged, referring to the ruling party in Uttar Pradesh.

"I received complaints that the Meerut DCB also accepted deposits by political leaders to the tune of about Rs 100 crore in violation of RBI guidelines.

"Through such tricks, the Cooperative banks in Uttar Pradesh transformed black money of over Rs 1,000 crore into white."

The government scrapped the old Rs 500 and Rs 1,000 currency notes effective the midnight of November 8. In a later order, the RBI barred cooperative banks from dealing in the old currency.

(S.P. Singh can be contacted at spsingh@gmail.com)

--IANS

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