New Delhi, January 19: Cementing earlier claims that referred to money laundering by influential people in rural banking sector via cooperative banks, the Income Tax Department has written to the RBI that it has found substantial malpractices in a number of cooperative banks’ operations post noteban.
In an analysis report prepared by the income tax department, serious difference in tune of multi-crore rupees has been detected. The report highlights two specific instances in Mumbai and Pune wherein over Rs 113 crore “excess amount” of old demonetised notes was reported by the banks to the banking regulator in order to generate black funds.
“In the Pune bank case, the reported amount (to the RBI) was Rs 242 crore while physical stock was of Rs 141 crore, showing clearly that the cooperative bank had reported to the RBI excess Specified Bank Notes (old currency) as on December 23, 2016 to the tune of Rs 101.07 crore. In the case of a similar bank in Mumbai, the excess amount of such notes was Rs 11.89 crore,” it said.
Under the surveys conducted by the department on these two banks after the note ban, a serious unexplained difference between the reported old notes and the physical stock was found, says the report.
The department informed RBI about these irregularities and malpractices. The report pointed out “excess reporting of old notes had serious potential for large scale conversion of old notes for new notes even after December 30, 2016”.
As a part of its modus operandi to uncover such banks, the central bank had issued a circular on December 30, 2016 that required all banks to deposit all old notes received till December 30, 2016 with RBI chests by the next day. The directive also stated that old notes cannot be part of the closing cash balance of banks as on December 31, 2016.
“A big possible window that would have allowed conversion of black money into white, post demonetisation, by the cooperative bank system was plugged to a larger extent after the I-T department detected these instances. In cases where such an activity has already taken place, the investigation is ongoing and notices have been issued,” officials said.
In one such case, Income-Tax department had found that directors of one cooperative bank in the small town of Alwar in Rajasthan cheated Rs 8 crore by fraudulently obtaining loans in the names of 90 persons of doubtful identities. This was primarily done to launder personal “unaccounted cash” of Rs 2 crore by the management.