The urban cooperative banks on Friday blamed commercial lenders for unavailability of cash and appealed to the Reserve Bank to look into the issue immediately so that they can serve their customers.
"UCBs are forced to return their customers empty handed due to paucity/non-availability of funds, which has created great resentment among general public against us," the Maharashtra Urban Co-operative Banks' Federation (MUCBF) said in a letter addressed to the Reserve Bank brass.
It said the UCBs, which are very active in states like Maharashtra, depend on the chests of scheduled commercial banks for support on a regular basis but lenders like SBI and others have refused to serve them following the November 8 demonetisation announcement.
The cooperative banks, which have deeper networks, are facing a lot of flak for being non-operational which has caused difficulties for their customers looking to exchange the now invalid notes for legal ones.
Stating that its 1,579 member-banks were open through the weekend as well, lack of support from its usual channels has made them "helpless" as they were not able to serve their customers, the letter said.
It said initially, the UCBs were treated at par with normal customers and given a withdrawal limit of only Rs 10,000 which was grossly insufficient.
Later on, despite a clarification by the RBI that the Rs 10,000 limit is not applicable to bank-to-bank transactions, the banks, especially SBI, have refused to adhere to the UCBs' requests.
"Till date our member banks are facing acute problems regarding supply of currency needed either to exchange against the specified bank notes and/or for honorary withdrawals of cash from ATMs/cash counters," it said, adding all attempts to secure the cash have been "infructious".
The letter said the currency chests run by commercial banks are refusing to take the older notes collected by UCBs from its customers, saying their own chests are overflowing with the now defunct bills.
The letter said the scheduled commercial banks should cooperate with the UCBs, and ensure they take the deposits, allow deposits and withdrawals from the currency chests.
"Our member banks are facing embarrassing situation. On one side there are huge crowds in branches of their neighbour banks (commercial lenders) who are smoothly providing new currencies and exchanging SBNs (specified bank notes), and on the other, there is no queue at all in front of branches of UCBs due to absence of legal tenders," the Federation said in the missive.
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