Cash Shortage Grips Kolhapur and Sangli Cooperative Banks, Digital Push Intensifies
The district central cooperative (DCC) banks in Kolhapur and Sangli have publicly acknowledged a significant shortage of cash, attributing the crisis to a slowdown in supply from currency chests. This development has forced these financial institutions to adopt urgent measures to manage the liquidity crunch.
Appeal for Digital Transition and RBI Intervention
In response to the cash deficit, the Kolhapur DCC bank has issued an appeal to its account holders, encouraging them to utilize digital payment methods, cheque-clearing services, mobile banking, and UPI facilities. This move aims to reduce the burden on cash issuance and alleviate some of the pressure on the bank's resources.
Simultaneously, the KDCC bank has formally written to the Reserve Bank of India (RBI), requesting intervention to restore normal cash supply levels. Bank officials have expressed concerns that the reduced cash flow from sources might be a deliberate strategy to push customers toward digital transactions.
High Cash Demand in Rural Areas
Cash demand has surged recently, driven by various village fairs in rural regions where farmers withdraw funds deposited for dairy and agricultural produce. The KDCC bank requires approximately Rs 15-20 crore in cash daily to meet the needs of account holders through cash counters and ATMs.
Gorakh Shinde, managing director of KDCC bank, emphasized the challenges faced by rural customers. "We have informed the RBI that most of our clients are from rural areas and do not frequently use digital payments. Many beneficiaries of direct benefit transfer (DBT) schemes and elderly individuals under the Sanjay Gandhi Niradhar Yojana rely on cash, as they are unable to conduct digital transactions," he stated.
Widespread Impact and Branch-Level Restrictions
Earlier this week, two ATMs of a nationalized bank in Kolhapur ran dry due to insufficient cash reserves for refilling. Similarly, Sangli DCC bank has been grappling with a cash shortage for the past two months.
Shivajirao Wagh, MD of Sangli DCC bank, revealed, "We are managing by sourcing cash from other banks. Last month, we had to obtain cash from a private bank in Goa to sustain operations."
At an SDCC bank branch, cash issuance has been capped at Rs 25,000 following verbal directives from higher authorities. A branch official explained, "We assess requests based on demand. For essential expenses like medical or marriage costs, we try to disburse cash, but for fund transfers, we insist on electronic methods."
Broader Regional Implications
Restrictions have also been imposed on cash withdrawals at an urban cooperative bank in Latur, located in a Market Yard area where traders often require large sums. A senior official from a nationalized bank, who chose to remain anonymous, noted that customers needing over Rs 10 lakh are advised to inform the bank in advance to facilitate transactions on days with lower overall withdrawals.
"A similar situation occurred recently in Surat, where a cooperative bank faced a cash crunch until the RBI stepped in to normalize supply," the official added.
Mixed Responses and Government Stance
When questioned about cash shortages, officials from Satara and Nashik DCC banks denied experiencing any such issues. State cooperation minister Babasaheb Patil commented, "I will investigate how many cooperative banks are affected. Currently, I have no specific information, but some banks occasionally face cash crunches. All DCC banks have digital infrastructure for seamless transactions, and customers should increasingly adopt digital modes in their daily activities."
