Govt to invoke Benami law to crackdown on unaccounted deposits

TRACING BLACK MONEY

EVEN AS the government plans to use powers under the benami law to confiscate illicit deposits into others’ accounts, banks have indicated that they do not have the capacity to differentiate between black money and white money being deposited. Bankers said they can only supply information to the agencies for investigation.

Prime Minister Narendra Modi on December 3 vowed that the corrupt would be sent to jail and he would get their money into accounts of the poor. “... I am thinking every day as to how to put these corrupt people, who have put money in the accounts of the poor, in jail, and the money reaches the poor,” Modi had said.

The Benami Transactions (Prohibition) Amendment Act, 2016 provides for rigorous imprisonment of up to 7 years, and a fine which may extend to 25 per cent of the fair market value of the benami property. It also empowers the government to confiscate deposits of people using others accounts to convert unaccounted wealth into white money, finance ministry sources said.

Unaccounted cash deposits in others’ account are included in the definition of property under the amended benami law, passed by Parliament in August and notified from November 1, the sources said. “Property means assets of any kind, whether movable or immovable, tangible or intangible, corporeal or incorporeal...and also includes the proceeds from the property,” the Act says.

Since the government announced its decision to abolish old notes of Rs 500 and Rs 1000, the deposits into Jan Dhan accounts swelled to Rs 74,321.55 crore as on November 30 from Rs 45,636.61 crore as on November 9. There have been instances of people using these accounts to launder their illicit wealth into accounted money.

While Prime Minister Modi stressed the government will use this money for the welfare of the poor, bankers and economists said it will quite tough to distinguish the black from the white in a bank account. Banks can only provide information to agencies, it is up to the agencies to analyse the information, said Rajnish Kumar, managing director (National Banking Group), the SBI. “If the account is KYC compliant, then one can deposit as much funds,” Kumar said.

“Indian people are very smart, you block one road and they will find another” of converting unaccounted money into white money, said Sudipto Mundle, Professor at National Institute of Public Finance and Policy.. “How will they (the government) find out (black money), I don’t know. With crores of Jan Dhan accounts, if they are able to find, then good luck,” he said.

The number of Jan Dhan accounts increased by 27 lakh since November 9 to 25.78 crore as on November 30. Bandhan Bank, which has majority of its accounts as Jan Dhan accounts, said banks do not have the capacity to detect whether unaccounted money has been deposited into these accounts.

“I cannot differentiate on that as a banker. I can only find out on that when I fill up the KYC of the customer, what is the source of that customer’s income. If the bank feels that at the KYC time, as in it finds out on income and cash deposits since opening the account in not that much, we are not interested to take that account (for scrutiny). But if someone fulfils KYC, and after that goes to another branch and deposits money there, I cannot track that,” said Chandra Shekhar Ghosh, MD & CEO, Bandhan Bank.

Sources said the Income Tax department may use data tools to ascertain whether an account has been misused. Last week, the Central Board of Direct Taxes said that it has found “various inconsistencies” in cash deposits in Jan Dhan accounts and detected about Rs 1.64 crore deposited by persons who have never filed returns as their income shown is below the taxable limit.

The deposits into Jan Dhan accounts swelled to Rs 74,321.55 crore as on Nov 30 from Rs 45,636.61 crore as on November 9