Spotlight on banks, dormant accounts with sudden outflow

Over 4 mn bank accounts could be dormant, suspects tax department.

About four million bank accounts have come under the scrutiny of the income-tax department, as officials observed a sudden surge in deposits in these accounts after demonetisation.

Prime Minister Narendra Modi announced the demonetisation of old Rs 500 and Rs 1,000 notes on November 8. The last date to deposit old notes in banks was December 30.

According to the latest data, close to six million accounts each received more than Rs 2 lakh since November 8. Total deposit in these accounts was about Rs 7 lakh crore till December 30.

Of these, balances in 0.7 million accounts matched with the data of the tax department. About Rs 30,000 crore cash was deposited in dormant bank account or non-functional accounts, which had not shown any activity over a long period.

“The deposits in such accounts are expected to increase significantly in the coming days,” said a senior tax official.

Based on such data, the Central Board of Direct Taxes has asked the taxman to list out the name of banks and the respective dormant accounts which have registered a sudden outflow during the demonetisation period, official added.

“Such activity indicates concert between bank and Reserve Bank of India officials who are suspected of misusing dormant accounts for money laundering,” said another tax official who is investigating the matter.

Some of these dormant bank accounts were also used for RTGS transfer and withdrawal after November 8. The information has been shared with the both the Central Bureau of Investigation and the Enforcement Directorate for investigation under anti-money laundering laws, he added.

The CBI, too, was investigating the role of RBI and bank officials. The agency had launched a preliminary enquiry against 35-40 officials of various public sector banks and the RBI, said a source.

Besides, banks have also been directed to ask account-holders, who did not furnish PAN or Form 60 at the time of opening bank account, to do so by February 28 this year.

According to the latest CBDT notification, banks, cooperative banks and post offices will have to report all-cash deposits between April 1 and November 8.

The ED carried out surveys and “enquiry of records” operation at 50 bank branches across the country to detect money laundering and hawala dealing instances through these channels. They had scrutinised transaction records and account statements, based on vital inputs gathered from their insider informer.

This was a nationwide operation across New Delhi, Mumbai, Bengaluru, Hyderabad, Kolkata and Chennai. The agency arrested two Axis Bank employees working at a branch in New Delhi while probing a similar instance under Prevention of Money Laundering Act, 2002. 

RBI had also suspended two erring officials, arrested by CBI, in connection with illegal conversion of Rs 2 crore of demonetised currency.