Dear Narendra Modiji,
This is in reference to your letter dated 8th November 2016 which we received yesterday. I assure you that the Government of Kerala is strongly in favour of taking all measures to control black money in our country.
The State Government has also advised our people not to panic and to resort to orderly withdrawals of cash from their accounts against Rs.500/Rs.1000 notes held by them. We shall be doing our best to ensure that no inconvenience is caused to the people of the State.
I would like raise a few issues that you may kindly like to address to make the operations that you have outlined in your letter efficiently with little disruption to the lives of ordinary citizens.
1.Kerala has 1551 Primary Agricultural Cooperative Societies (PACS) spread throughout the length and breadth of the State. The PACs are affiliated to the District Cooperative Banks (DCBs) which number fourteen in all. Besides, there are 3631 Primary Credit Societies/Banks. In addition there are 217 Primary Consumer Societies, 268 Marketing Societies and 3936 Miscellaneous Societies all of which have credit activities. These classes of institutions are outside the ambit of regular banking. However they form the backbone of agricultural and retail operations in the State. These institutions account for over Rs.75,000 crores of deposits of its members. No provision has been made for facilitating transactions of Rs.500 and Rs.1000 currency notes in these institutions.
DCBs may be permitted to accept and exchange notes Rs.500/1000 currency notes in modification of the existing Para 2 of Gazette Notification 2652 of the Government of India and allow adequate cash withdrawal facilities for all the cooperative institutions from banks to facilitate smooth transactions.
As you yourself have worked for several decades in the co-operative sector and appreciate the critical nature of these institutions in a State’s economy, I request you to intervene urgently.
2.In your letter you have asked State Transport Bus Corporations, Crematoria, burial grounds, milk booths and consumer cooperative supermarkets to allow transactions here up to 11th November 2016. I wish to suggest the following for your kind consideration:
a.The RBI Circular issued on demonetising Rs.500 and Rs.1000 currency notes do not provide for any separate treatment of the above institutions. Unless these institutions are permitted to withdraw currency of lower denominations, beyond the limits of Rs.10,000 imposed currently, based on their actual need they will not be able to continue such transactions. In the alternative, they may be permitted to remit the amounts to the State Treasury and the State Treasury may be allowed to deposit these amounts on their behalf.
b.The time-limit of 11th November 2016 that you have proposed for the above institutions to handle transactions in currency notes of Rs.500 and Rs.1000 may not be sufficient for the smooth and orderly transition that you have desired. Hence I request that this time-limit may be increased by one week till 18th November 2016 now and reviewed later.
3.In addition to the institutions that you have specified in the letter, the State Electricity Boards, Utilities including Water Supply, State Financial Institutions (e.g. Kerala Financial Corporation, Kerala State Financial Enterprise) may also be included in this list of institutions.
4.The State Treasury also needs to be provided special facilities as otherwise treasury operations of the State will also come to a grinding halt. Today, the Banks have permitted the State Treasuries to avail an imprest advance that will suffice only for emergency operations. But unless, all existing financial transactions through the Treasuries are permitted, there will be a breakdown of the State machinery.
5.Finally, I would like to point out that the Gazette Notification and the RBI Circular has notified that Rs.500 and Rs.1000 currency notes will not be legal tender with effect from 8th November 2016 (midnight) except to the extent specified in this Notification. Many have therefore pointed out the legal validity of allowing those institutions that you have listed in your letter to transact in money that has been declared to be invalid legal tender, as these transactions or institutions are not specified in the Gazette Notification. A modification in the Gazette Notification may be necessary in this regard.
I request your kind and early intervention in the matter.
Shri. Narendra Modi
Hon’ble Prime Minister of India
152, South Block, Raisina Hill,
New Delhi – 110 011.