Co operative banks in Kerala were struggling due to difficulty in giving back deposits to it’s customers. Reserve Bank of India di not allow exchange of cash at Co-operative banks, because it did not function as per guidelines. Initiative to give Kerala co operative bank moratorium was done on 31 November 2016 to reduce problems faced by ordinary people of Kerala.
Moratorium is a way of giving more time or delaying legal procedures for a stipulated extended period. In this case Kerala Government has decided to give moratorium of 4 months on repayment of loans taken from Co operative banking institutions. Kadakampally Surendran is new Kerala State Cooperation Minister and he gave decision regarding it. Most people who depend on Co operative banks are common poor people of Kerala. Repayment of loans by people who have taken borrowing from Co operative banks has become difficult because of unavailability of money. So to overcome problems of people in paying off debts during demonetisation impact, Kerala Government decided to give extended moratorium.
All revenue recovery measures against failure to make loan repayments will not be done till 31-3-2017. Kadakampally Surendran informed that all revenue recovery measures will be suspended till 31st March 2016. Kerala co operative bank moratorium was extended to give time for all people suffering from demonetisation measures to overcome their present financial problems.
Few days back a hartal strike was conducted by ruling LDF party against actions taken by Central Government against Co-operative banks in Kerala. Later RBI decided to give some relaxations in rules to Co operative banks.
RBI gave permission to withdraw deposits in co operative banks through District Cooperative banks (Jilla bank). For this customers of Co-op banks have to follow simple procedures. All customers should start a zero balance account with District cooperative banks with KYC details.
Later deposits of a customer in Co operative bank will be transferred to Jilla (District) co operative bank account. From here cash can be withdrawn up to Rs.24,000per week. This is present way to withdraw deposits from Co operative banks in Kerala as per Reserve Bank of India circular.
Declaration of moratorium on repayment of loans and suspending all recovery measures for 4 months on loans is applicable from 30 November 2016 to 31 March 2017.
This decision taken by Kerala State Cooperation Minister Kadakampally Surendran is a huge relief to all customers in Co-op banks.
RBI has asked Co-operative banks many times to implement Know your customer (KYC) norms. Without following it customers of these Sahakarana banks will not be allowed to withdraw funds directly from this bank. They can make withdrawals by starting a account at District co-operative bank which meets KYC norms.
After demonetisation there were lot of complaints that black money was hidden in co-operative banks in India. This led to RBI decision in preventing Co-op banks to exchange new notes.
With demonetization of currency all loans which were passed could not be given due to non availability of cash with Sahakarana (co-operative) banks .