RBI Asks Cooperative Banks To Comply With Currency Exchange Instructions

Reserve Bank of India cautions cooperative banks in light of reports that instructions are not being complied with

BQ Desk @bqprime

15 Nov 2016, 11:49 PM IST

An employee counts Indian five-hundred rupee banknotes at a bank branch. (Photographer: Dhiraj Singh/Bloomberg)

The Reserve Bank of India has instructed cooperative banks to adhere strictly to rules prescribed for the exchange of old currency notes.

In a press release issued on Tuesday, the regulator cited reports that some cooperative banks are not strictly adhering to the instructions issued in connection with the withdrawal of legal tender status Rs 500 and Rs1000 bank notes. The RBI did not elaborate on any specific violations that may have been found.

The Reserve Bank of India today informed that it has advised the Urban Cooperative Banks through its Regional Offices and the State Cooperative Banks through National Bank for Agricultural and Rural Development (NABARD) of the need to ensure strict compliance with the instructions issued with regard to exchange of specified bank notes as also deposit of such notes into the accounts of their customers.

Reserve Bank of India Release

Separately, in a press release on Monday, the RBI had said that District Cooperative Banks (DCCBs) (a subset of cooperative banks) cannot participate in the exchange of old currency notes. These banks, however, can allow existing customers to withdraw money from their accounts upto Rs 24,000 per week.

On 8 November, the government announced that notes of Rs 500 and Rs 1,000 denomination would no longer be legal tender. Citizens were given until the end of the year to exchange these notes at banks and post offices.

While accepting deposits of old notes, banks are being asked to maintain vigilance on large deposits that may not be in keeping with a customers income statements.

The government and the RBI have also imposed strict limits on withdrawals. At present, customers can get Rs 4,500 in exchange for their old currency deposits on the spot with the rest being credited into their accounts. There is also a weekly limit of Rs 24,000 on withdrawals from bank accounts.