Noose tightens around 5,800 shell firms

The government has collected startling data on multiple accounts of 5,800 shell companies out of the over 200,000 that were struck off by the registrar of companies (RoC). Some of these companies operated accounts even after their names were taken off the rolls. The companies deposited and withdrew huge amounts from banks post-demonetisation, while they had meagre deposits before November 8, 2016.

Of these, one company, Gold Sukh Trade India Limited, had 2,134 accounts alone. Another company, Ashwin Vanaspati, had 900 accounts, official sources said.

Similarly other companies — Shanti Infrastructure and Colonisers Private Limited, Aptive IT Solutions and Swarnalabh Trade Link among others — had multiple accounts.

The government had asked for data from banks about over 200,000 companies whose accounts were frozen. The data from 13 banks reveals that 5,800 companies have more than 12,000 accounts.

An official statement said here that these companies, which had meagre amounts in banks, deposited more than ~4,570 crore in their accounts and withdrew an equally large amount of ~4,552 crore, post- demonetisation. Before demonetisation, these companies had a balance of ~22.05 crore, net of loans, in banks.

The companies continued to operate by making deposits and withdrawing even after being struck off the rolls of the RoC. In one of the banks, 429 companies, with zero balance before demonetisation, deposited and withdrew over ~11 crore and left a cumulative balance of ~ 4,200 crore at the time of their accounts being frozen.

These 5,800 companies account for around 2.5 per cent of the companies struck off. The government has struck off more than 200,000 companies from the rolls, calling them shell companies. "The huge money game played by these companies may well be the tip of an iceberg of corruption, black money and black deeds of these and many more of their brethren," the statement said.

The investigative agencies have been asked to complete necessary investigation in a time-bound manner. The country and honest citizens could look forward to a cleaner tomorrow, the statement added.

Further, the government also disqualified a number of directors associated with these companies. There are around 100,000 directors.

Officials state that more names of directors will be released as the government continues the crackdown on shell companies.

Another senior official from the ministry of corporate affairs stated, “In one location, there are as many as a thousand companies registered.”

The major chunk of the tainted accounts is with IDBI Bank. The bank has listed 3,330 companies and 3,634 accounts in which some even showed negative balance at the time of their being frozen. The balance in some of these accounts at the time of demonetisation was ~ 13.29 crore and it swelled to ~ 3,792.40 crore post- demonetisation. Some of these companies withdrew ~ 3,794.04 crore before being struck off. Activity continued in these accounts after being struck off to the tune of ~ 249.45 crore. Business Standard has reviewed the letters sent by banks to the government.

Bank of Baroda (BoB) has sent a list of 1,701 companies out of which a few have at least 100 accounts and have deposited and withdrawn amounts during demonetisation till they were struck off.