Kerala: Panel asks cooperative banks to ensure KYC, PAN, TDS

THIRUVANANTHAPURAM: The committee constituted by the Planning Board to study the impact on demonetisation has said that the cooperative sector should ensure KYC compliance, insist on PAN card registration, and deduct tax at source (TDS) on its deposits, practices the sector had generally shunned. “This would imply information collection and reporting procedures that can prevent allegations that primary agricultural credit societies (PACS) are vulnerable to exploitation by tax evaders, money launderers, counterfeiters and those engaged in criminal activities,” the report, which was submitted to the Chief Minister on Friday, stated.

Further, the report said that shifts to technological solutions that allow all PACS and their branches to be connected and networked and link that network to the larger world of scheduled commercial banks were needed. The report said that the impact of demonetisation on the cooperative sector had seriously affected the state’s economy. Throwing light on the importance of PACS for the state, the report compared the geographical distribution of commercial banks offices with PACS in Kasargod and Wayanad. “The spread of PACS is much wider than that of commercial banks. In large swathes, PACS are the only institutions that reach out to the rural people in these two districts,” said D Narayana, a member of the committee.

The report said that full remonetisation of the economy was unlikely. “So, Kerala must find ways to limit the adverse consequences of the policy, especially with regard to the livelihoods and welfare of the poorest,” the report said. For this, the report recommended that plan expenditures should be maintained at targeted level.  Further, the report called for the formation of ‘National Demonetisation Impact Relief Fund’ to which the states can address their demands. “Transfers from the Fund can be used to finance direct benefits to the most severely affected sections of the population, which in the case of Kerala would consist of informal and migrant workers,” the report said. The five-member Committee headed by noted economist Prof C P Chandrasekhar was constituted by the Planning Board on November 23, 15 days after demonetisation was announced.