Israeli banks refusing shekel cash deposits from West Bank, Palestinian officials say

By Ali Sawafta

JERUSALEM (Reuters) - Israeli banks are refusing shekel cash transfers from Palestinian banks in the occupied West Bank in a move that could soon prevent Palestinians from accessing vital goods and services, Palestinian officials said.

The office of Israel's finance minister Bezalel Smotrich, who in June extended a waiver that allows the country's banks to cooperate with Palestinian banks in the West Bank, had no immediate comment.

"In the next few days, banks in Palestine will be unable to finance trade operations between Palestinian and Israeli merchants, as their ability to make financial transfers is directly connected to shipping the accumulated shekel banknotes to their Israeli counterparts," the Palestinian Monetary Authority said.

It added this will prevent Palestinians from accessing vital goods and services as they will be unable to pay for them through official banking channels.

Violence in the West Bank has escalated since war broke out last October between Israel and the Palestinian militant group Hamas in Gaza. The territory is at the same time hurtling towards a financial crisis.

Smotrich heads a pro-settler party in Prime Minister Benjamin Netanyahu's ruling coalition.

(Additional reporting by Maytaal Angel; Editing by David Holmes)