A number of cooperative banks have been found tampering cash records with "serious unexplained difference between the old notes reported to the RBI and the physical stock" available with the banks after the government's demonetisation. The Income Tax Department (I-T Department) has informed the Reserve Bank of India (RBI) that its investigation revealed illegal malpractices being deployed by such banks to the tune of multi-crore rupees.
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In a report, I-T Dept gave an example of two banks on which it carried out surveys – one in Mumbai and another in Pune – after suspecting unusual transactions post the note ban. The department disclosed that over Rs 113 crore in "excess amount" of old demonetised notes was reported by the two banks to the RBI 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," I-T Department said.
I-T officials said it apprehends the "excess reporting of old notes had serious potential for large-scale conversion of old notes for new notes even after December 30, 2016 (the last date for the validity of the old notes)."
The RBI had issued a notification on December 30 asking all banks to deposit all old notes received till that date with RBI chests by the next day, ie, December 31, and also said that old notes cannot form 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.
Tax sleuths have previously raised serious concerns over the working of a number of cooperative banks across the country using demonetisation as an "opportunity" to generate and route black money at an "unprecedented" scale.
