Black money hoarders find new escape route via banks

Ever since the government scrapped the high old currency notes, hoarders are finding innovative ways to hide their money from the tax inspector

Published: 05th December 2016 12:08 AM  |   Last Updated: 05th December 2016 07:43 AM   |  A+A-


File photo for representational purposes only.

Express News Service

BENGALURU: Close on the heels of the demonetisation move, even as the government has come up with new regulations to limit ownership of gold, ironically, hoarders are coming up with innovative ways to route unaccounted wealth.

Bank officials and investigation officials in Central Crime Branch told Express that several of these informal ways of circulating money is likely to go untraced as they are outside official record keeping. More importantly, they felt a need for closer monitoring of money going out of banks and the RBI itself, as insiders are suspected to be hand in glove in cash exchange of large sums.

Recently, the IT department recovered Rs 5 crore in cash from government officials in Bengaluru, out of which Rs 4.7 crore were found to be the new Rs 2,000 notes.

Some of the bankers that Express spoke to said such a con cannot be pulled without support from those within the system. “It appears that these people could have amassed such a huge sum of money only with the help of either known people in the RBI or in head offices of banks. It is impossible otherwise for anyone to withdraw such a large sum in such a short span of time,” a senior bank official in Mangaluru, said adding that it was not possible for anyone to withdraw such a huge sum from a branch office as there was a shortage of currency supply.  

Have the banks come up with a new system for stringent monitoring of cash transactions of customers? The official stated that post the demonetisation move, even the denominations of the currency deposited and withdrawn in banks was digitally recorded and the data centralised. Earlier the denomination was recorded only manually. This could streamline transactions to a certain extent.

A Central Crime Branch sleuth also shared that as per the information they had, hoarders were routing large cash through banks themselves. “There are several people who have started unauthorised businesses of cash exchange. This can happen only when there is a supply of cash to them from those within the system.”
Further, over the past three weeks, it has been found that a lot of hoarders are making use of their employees to open new accounts and deposit their unaccounted money. In some cases, salaries are being given in advance for a couple of months, to deposit large sums of money in the newly created accounts.

In other cases, people are lending out money to daily wage labourers and domestic helps, without taking any interest on it. In rural areas, showing it as agricultural income has been a popular way to avoid questions on wealth.

Apart from this people are depositing money in temples.
Indeed there was no way of tracking either temple donations or unofficial systems of loans which operated merely on the basis of an understanding between the borrower and the lender, branch manager of a nationalised bank in Bengaluru stated. “A donation technically is something that is given away and hence does not attract any scrutiny on it. When it comes to circulation of money through unofficial loans, there no records for it. The system operates only the basis of an understanding,” the official added.


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