Primary agricultural credit societies (PACS) in the state are facing a crisis as the new rules issued by the Reserve Bank does not allow them to do financial transactions over Rs 20,000 by cash. Also, the income tax department is adamant on charging tax deducted at source (TDS) on interest payment and has moved the Supreme Court in this connection challenging the high court verdict.

 

"Though we somehow managed the crisis during the demonetisation, the situation has worsened after RBI issued new regulations. Our business has been affected," said district secretary of Kerala Primary Cooperative Societies' Association (KPCSA) K Narayanan. In the cooperative societies, the main business is loan, including gold loan, and in many cases it would be to the tune of a few lakhs. With RBI's new rule, such transactions are impossible and PACS are in crisis, he said.

 

When the government said the details of people who had Rs 25 lakh or more as deposit had to be submitted, primary cooperative banks did it but nothing fraudulent in this connection has come to the light, he said, adding that the rural economy will be affected if regulations and restrictions are imposed beyond a limit.

 

Now, PACS are lobbying to get a licence to do financial transactions in the same manner as district cooperative and urban banks. KPCSA district president V Kunhikrishnan said their association is planning a statelevel meeting on July 25 to decide the future course of action regarding TDS.

 

"When the banking sector is ruled by a few monopolies, we survive on small-time deposits and loans. Now, we are being denied even that freedom. We have to fight to survive in this field because we play a major role in sustaining the rural economy," he said.

 

Source: Times of India