Kerala Chief Minister Pinarayi Vijayan led a protest outside the RBI office on Friday along with 17 cabinet ministers and party leader Sitaram Yechury.
They said that the move by RBI not to allow these banks to accept deposit or change the existing notes is destroying the co-operative sector.
After the demonetisation move, primary co-operative banks could withdraw only up to ₹24,000 from the district co-operative banks.
“The cooperative banking sector in Kerala has a deposit base of ₹1.27 lakh crore. Such a huge deposit base would not have come about if there was corruption in the running of these institutions. They are also not havens for stashing away black money as they are subject to strong regulations,” said Pinarayi Vijayan.
“Nobody is against curbing black money, but those who have gone in for demonetisation in the name of fighting black money should think aloud whether their purpose would be served with such assault on Kerala’s cooperative sector,” he added
CP(I)M general secretary also joined the protest. Yechury said that CP(I)M, in association with other political parties, would try to pressurise the government to compensate the States the losses suffered due to demonetisati
He added that India is a sovereign country and this kind of anarchy would not be allowed.
The opposition also extended their support to government’s move, by saying that co-operative sector faces severe challenges.
The State government has convened an urgent cabinet meeting on Friday evening and an all party meeting on November 21.
Meanwhile, BJP leaders in the state alleged that black money is being deposited in most of the co-operative banks.
BJP state president Kummanam Rajashekaran said that Cabinet’s sit-in satyagraha was sponsored by black money hoarders.
The state has 1,551 primary cooperative banks with deposits of about ₹1, 37,000 crore of which roughly 80% are given as loans for agriculture, marriages, home and two-wheeler loans.