The BEFI said banks had no idea where from they would collect indelible ink or who would supply it.
"The use of indelible ink has been an eyewash. Most bank officials were unable to procure the ink till Wednesday night. Even on Thursday, supply of indelible ink was not satisfactory. The Election Commission refused to provide indelible ink... Bank officials have no alternative but to use delible ink," said BEFI General Secretary Pradip Biswas.
"The Election Commission said unless and until they have permission from higher authorities, they will be not be able to provide indelinible ink," he said.
The federation said the exclusion of district central cooperative banks and cooperatives from exchanging and accepting demonetised notes had created a "mess" in the cooperative sector.
The Centre on Thursday reduced the new money an individual can exchange for old Rs 500 and Rs 1,000 notes to Rs 2,000 from Rs 4,500.
"This will make the situation worse," Biswas said.
The federation said primary agricultural cooperatives and other cooperative bodies normally deposit their surplus cash mainly with district cental cooperative banks.
"The decision of the Centre and Reserve Bank's exclusion of cooperative banks and bodies from exchanging old notes is adversely affecting 20 per cent of the most deserving section of society," said federation secretary Joydeb Dasgupta.
He said cooperative banks were the only institutions for rural people to deposit and exchange demonetised currency.
"The RBI circular has landed rural people, particularly farmers, in crisis. They are not in a position to sell their agricultural products and procure essential commodities for their daily needs.
"We appeal for modification of the RBI circular to permit cooperative banks to exchange Rs 500 and Rs 1,000 notes," Dasgupta added.