BANGALORE: Nandan Nilekani’s Unique Identification Number (UID) scheme may not be all that useful in curbing black money as he claims, because a substantial chunk of the dirty money is no longer parked in banks as it used to be in the earlier days.
A large portion of unaccounted money is re-invested in real estate, immovable property and also parked in overseas tax havens like Switzerland and Mauritius, and not kept in Indian banks because of the high risk of getting caught, a senior Indian Revenue Service official told the Express.
Experts opined that parking black money in Indian banks is no longer worth the risk as the chances of getting caught are high. Even if the norm of furnishing UID while opening an account is established, the situation, on the contrary, will only improve marginally and not on a drastic scale, they feel.
“Banks are required to file annual information returns and periodic suspicious transactions reports. To do a transaction over Rs 50,000 PAN is mandatory. To cut down benami accounts, the Know Your Customer (KYC) norms, which require the person opening an account to be introduced by another person with valid credentials, is also mandatory.
Because of all these checks, the amount of black money in banks is relatively low and the introduction of UID will only have a small incremental impact and not a sure shot effect,” the official said.
The earlier practice of investing black money in the share market has also come down after the introduction of demat accounts.
The UID will supplement the existing practices to cut down on benami accounts, he noted.
So where does all the black money come from and go to? Most of the black money, or alternatively, un-accounted money comes from kickbacks, commissions, real estate deals, bribes and corruption at various levels and goes into real estate or tax havens.
More recently, to detect and bring down the amount of unaccounted money in tax havens, the Government’s Financial Intelligence Unit and agencies are in the process of mounting pressure on black economy at international forums.