With Union Government decision to froze the deposits in cooperative banks, people in rural areas in Kerala, mostly farmers are finding difficult to cope with the demonetisation move of the Centre.

Omanakkuttan Pillai, 73, committed suicide on Monday over the fear of losing the money he had deposited in a local cooperative bank. His son Binu said that Pillai committed suicide over the fear of losing the money due to the crisis.

Pillai had deposited ₹5 lakh with Pamba Valley branch of Kanamala Cooperative Bank, in Erumely, Kottayam. He was worried over investigations into the transactions made by account holders of cooperative banks and restrictions on currency transfer by the cooperatives, the police said. 

With the cooperative sector plunging into deep crisis, the farmers in rural Kerala are in a quandary. A wave of panic has hit the farmers, and they fear that crisis will deepen if the government did not intervene to save the sector. Cooperative banks have been the lifeline for rural farmers and a vast majority have deposited their lifetime earnings in these banks. 

A 2013 study co-authored by Reserve Bank of India had revealed that most households in rural areas hold an account or deposit at cooperative banks and the movement is strong in the state. The poor consider it more approachable and friendly in comparison to commercial banks and a never-ending cycle of borrowing and lending small amounts takes place in the cooperative sector.

The report, which is already handed over to Chief Minister Pinarayi Vijayan, shows that people in rural Kerala consider the cooperative bank as an institution they can rely on for meeting their financial needs. 

Individuals with deposits in cooperative banks are the worst hit with the demonetisation. Though customers of the commercial bank are allowed to receive banned ₹500 and ₹1000 notes cooperatives are not authorised to accept demonetised currency notes. Those who had accounts with cooperative banks had to open an account with commercial banks. Further, reports that cooperative sector in Kerala is packed with black money prompted RBI to impose restrictions on currency transfer by cooperatives.