RBI asks banks to ensure adequate cash supply to cooperative Banks

The Reserve Bank of India has asked banks to ensure adequate cash supply to cooperative banks and Regional Rural Banks so that farmers can have enough valid notes needed for purchase of seeds, fertiliser and other inputs during the on-going rabi season.In a notification issued in Mumbai last evening, RBI has estimated that about Rupees 35,000 crore would be required to support farmers and to ensure unhindered farming operations.

The apex bank has stated, that National Bank for Agriculture and Rural Development (NABARD) will be utilising its own cash credit limits up to about 23,000 crore rupees to ensure loans for Primary Agricultural Credit Society and farmers.It further said, bank branches located in Agricultural Produce Market Committee may also be given adequate cash to facilitate smooth procurement.

The decision comes after Finance Minister Arun Jaitley had a meeting with RBI, NABARD and all bankers and impressed upon them to make available funds to the cooperative sector as it is an important financing mechanism for rural India.The Reserve Bank has also asked banks to increase their vigilance and take stern action against employees who indulge in fraudulent practices while exchanging or depositing the old 500 and 1000 rupee notes.

RBI said it has noticed that some bank branch officials, in connivance with some miscreants, are indulging in fraudulent practices. It has asked banks to ensure strict compliance with rules set in this regard and maintain denomination wise details of all the notes deposited in the account of each and every bank customer, regular or otherwise.

10pt;">It has asked banks to remain prepared to provide these details at short notice.In a marginal relief to wedding families, RBI relaxed one of the conditions for withdrawal of 2.5 lakh rupees, from their own accounts by making declaration for payments beyond 10,000 rupees only.Earlier, the drawee had to declare all payments made, of the 2.5 lakh rupees withdrawn from the account.

With the public facing cash crunch, RBI has introduced special dispensation for small merchants and doubled the limit of semi-closed Prepaid Payment Instruments (PPIs) to 20,000 rupees to facilitate digital transactions.

While balance in such PPIs cannot exceed 20,000 rupees at any point of time, the merchants can transfer funds from such PPIs to their own linked bank accounts up to 50,000 rupees per month, without any limit per transaction. This measure will be effective till 30th of December.

In the statement RBI also dispelled rumours of fake 10 rupees coin in circulation. RBI asked people not to give credence to such rumours and continue to accept these coins as legal tender in all their transactions without any hesitation.

Earlier, the Government had allowed farmers to purchase seeds with old denomination bank notes of 500 rupees from Centres, units and other outlets belonging to the Central or State Governments on production of proof of identity.The provision is in addition to the decision taken for making cash available with the farmers by permitting them to draw up to 25,000 rupees per week from their accounts.