High Court seeks to know RBI's 'immediate steps' over DCCBs' pleas

AHMEDABAD: The Gujarat High Court today directed the RBI to spell out the "immediate steps" it plans to undertake following requests made by two DCCBs to allow them to collect defunct currency notes from their customers.

A division bench of Chief Justice R Subhash Reddy and Justice V M Pancholi asked the RBI lawyer to seek instructions from the apex bank on what immediate measures it plans to undertake.

"Lots of farmers have their accounts only in DCCBs. Considering this, get instructions (from RBI) over the immediate steps to be undertaken on the petitioners' request," the bench asked the lawyer.

The Bhavnagar District Co-operative Bank, Kheda District Central Co-operative Bank and a farmers' body-- Gujarat Khedut Hitrakshak Samiti-- have challenged the legality of RBI circulars banning the DCCBs from exchanging defunct notes and have also sought quashing of the Centre's notification dated November 8 declaring demonetisation of currency notes of Rs 500 and Rs 1,000.

Although the court said that it was not inclined to accept the requests at this stage, it sought a reply from the RBI on what immediate measures it plans to take to address the petitioners' woes.

The high court adjourned the matter till December 19, after the Supreme Court has heard similar petitions, in order to avoid conflicting orders.

In their pleas, the two banks and the farmers' body have questioned the ban on exchange of old notes, observing that a lot of farmers have accounts in only the DCCBs.

The Bhavnagar District Co-operative Bank, which has challenged the RBI circular prohibiting DCCBs from accepting money from other banks, submitted before the court that it should be allowed to collect defunct notes from its customers and it is suffering huge loss in terms of money and customers.

Kheda District Central Co-operative Bank has pleaded that DCCBs should be allowed to deposit money collected before RBI's November 14 circular prohibiting it from collecting defunct currency notes. It said that it has taken overdraft on fixed deposits from other banks and hence should be allowed to deposit money in another bank--in its case, the State Bank of India (SBI) so that it does not lose its overdraft.