SC rejects coop bank’s plea to lift bar on exchange of Rs371-cr of old notes
28 Mar 2017
A bench of the Supreme Court headed by Chief Justice J S Khehar on Monday dismissed a plea by Nashik District Central Cooperative Bank Ltd seeking to quash the RBI letter barring it from exchanging Rs371 crore it had deposited in demonetised currency.
The bank in its petition said that barring of the exchange before 31 March deadline will lead to closure of its 281 branches in Nashik district. It said the money is needed to keep the bank liquid and avert a collapse.
"We have to shut down if we do not have liquidity ratio as was mandated by the Reserve Bank of India. To maintain the ratio, Rs371 crore need to be exchanged with the central bank," senior advocate Rajeev Dhavan, appearing for the cooperative bank, said.
The co-op bank is seeking to reverse an RBI order, which barred the bank from exchanging the demonetised currency deposited with it by customers in six days after the currency ban - between 8 and 14 of November 2016.
Dhavan cited NABARD's inspection report that found shortfall in the bank's liquidity ratio to drive home his point that the amount of demonetised currency needs to be exchanged with the RBI to keep the bank liquid, adding that NABARD had inspected the details of the bank deposits.
"The closure of branches of the bank will lead to serious issues as it deals mostly with agriculture loans given to farmers," he said.
The apex court also rejected a similar petition filed by a firm Ranu Enterprises Ltd, which has been declared as a non-performing asset (NPA) to deposit Rs10 crore in demonetised currency.
The company had sought a direction for the RBI to permit deposit of money in old currency notes.
"We find no ground to entertain the instant petition under Article 32 of the Constitution of India. The writ petition is accordingly dismissed," the bench said.
