On paper, Anita lives in house number 15/46 in one of the many dingy bylanes that make up south Delhi’s Sangam Vihar. But one visit to the congested neighbourhood choked with haphazard construction and unruly traffic is enough to bust the hoax.
Neighbours say the woman left the city a long time ago and her bank account in the State Bank of India’s Sangam Vihar branch – which lists her local address – has been lying dormant for many years.
But days after the government recalled high-value currency in November, her account suddenly received Rs 1.78 lakh through real-time gross settlement systems (RTGS), a form of online money transfer.
Her’s was one of 430,288 dormant bank accounts across India that saw a sudden inflow of cash and wire transfers a fortnight after the scrapping of two high-value banknotes, HT has found. An account is deemed dormant if there has been no transaction for over two years.
An analysis of classified bank transaction data revealed Rs 6,400.51 crore was deposited with dormant accounts in public sector banks between November 8 – when – and November 22. About Rs 799 crore was also wired out of these accounts within the fortnight.
All these deposits – cash or through wire transfer– were below Rs 2 lakh. The government had announced any deposit of more than Rs 2.5 lakh would be scrutinised by the income tax department.
“We are investigating some of these cases. We are suspecting cash deposits were parked in unclaimed accounts with the collusion of bank officials,” said a tax official, requesting anonymity.
The Reserve Bank of India did not respond to HT’s emails seeking comments on whether it suspected wrongdoing by bank officials or was investigating any of them.
If a dormant account needs to be reactivated, a fresh application needs to be made along with a copy of identification. This falls in the category of reactivated dormant accounts. Data reviewed by HT showed that 27,496 dormant accounts were reactivated between November 8 and 22.
These reactivated accounts saw Rs 84.16 crore deposits; most of it – Rs 81.6 crore — came in cash. In contrast to the dormant accounts, the cash received in many of the reactivated accounts was above the tax-scrutiny threshold of Rs 2.5 lakh.
The analysis found that a fourth of all deposits in dormant accounts were made through wire transfers. Rs 799 crore was later withdrawn from these accounts, again through wire transfers.
Experts say this could be an instance of people parking their illegal income in several dormant accounts and then later withdrawing the money, in a bid to dodge tax scrutiny.
“Demonetisation necessitated lot of people to use their bank accounts, so they might have reactivated dormant accounts, this could explain the cash deposits. But wire transfers are definitely suspicious. This could be an instance where the money was temporarily parked in these accounts and later transferred,” said Vipin Malick, a former member of the RBI board of governors and a chartered accountant.
For example, if a person has unaccounted-for cash stashed away, they may collude with bank officials to deposit the income in a number of bank accounts, move it around between several dormant accounts and later send it to the ultimate beneficiary.
This way the money trail remains hidden from tax officials. “Because the suspicion is often focused on cash deposits, wire transfers are deemed safer for launderers,” said the tax official.
The scrapping of the banknotes was aimed at stamping out illegal cash from the economy but analysts say corrupt bank officials helped many people park their ill-gotten incomes into others accounts. Most of the cash that was withdrawn appears to have come back to banks, reports say.
“After demonetisation, money was laundered through purchase of gold, through foreign exchange, the spike in gold imports and movement through banking channels to reach its ultimate destination. Various modes of layering were adopted. This requires big data analysis to sift through the information that is flowing,” said Rani Singh Nair, former chairperson of the central board of indirect taxes (CBDT).