1. Jan Dhan surges Rs 15,000 cr in 10 days as money launderers by-pass demonetisation

Jan Dhan surges Rs 15,000 cr in 10 days as money launderers by-pass demonetisation

Jan Dhan accounts, integral to the Modi government’s plan for financial inclusion and direct benefit transfer, were meant to have a transformational role in the uplift of the underprivileged, but, ironically, demonetisation has made them a parking lot for black money.

By: | New Delhi | Published: November 24, 2016 6:31 AM

 

Official sources told FE that these accounts saw transactions of R19,250 crore in the 10 days to November 19; over R15,000 crore was deposited and some R4,250 crore was withdrawn. (PTI) Official sources told FE that these accounts saw transactions of R19,250 crore in the 10 days to November 19; over R15,000 crore was deposited and some R4,250 crore was withdrawn. (PTI)

Jan Dhan accounts, integral to the Modi government’s plan for financial inclusion and direct benefit transfer, were meant to have a transformational role in the uplift of the underprivileged, but, ironically, demonetisation has made them a parking lot for black money. Official sources told FE that these accounts saw transactions of R19,250 crore in the 10 days to November 19; over R15,000 crore was deposited and some R4,250 crore was withdrawn. As on November 8, the day Prime Minister Narendra Modi announced that R500 and R1,000 banknotes would henceforth cease to be legal tender, Jan Dhan accounts held R45,637 crore, accumulated over two years and a month.

Deposits in these accounts, 25.5 crore at last count, rose by a third to around R61,000 crore between November 10 and 19, as people with hordes of unaccounted cash sought to convert them to legitimate wealth, according to data furnished by 27 public sector banks and 13 private banks. The account holders have either received rewards for allowing their accounts to be misused or been unaware of the third-party deposits made into their accounts.

According to a PTI report, Mamata Banerjee-ruled West Bengal leads the pack of states that has seen the highest deposits so far followed by Karnataka.

Modi launched the Pradhan Mantri Jan Dhan Yojana (PMJDY) in August 2014. As the government kept public sector banks on their toes, in just over a year, 19.72 crore accounts were opened and 16.8 crore RuPay cards were issued under the scheme, but it later turned out that a sizeable number of accounts remained zero-balance ones. Accounts with nil deposits were 77% of the total at the end of September 2014, but thanks to various government schemes and transfer of subsidies, only 24% of the accounts showed nil balance two years later.

As it became clear that Jan Dhan and other low-deposit accounts were misused by black money holders, the finance ministry last Friday warned that such attempts to convert unaccounted cash would attract “income tax and penalty”.

The ministry added that persons who allow his or her accounts to be misused could be prosecuted for abetment. Revenue secretary Hasmukh Adhia had earlier said that if more than R10 lakh is deposited in an account between November 10 and December 30 without matching income declared, tax plus penalty of 200% of the tax would be levied as per Section 270 (A) of the Income Tax Act. While tax experts doubted the legal tenability of the move, Friday’s release by the ministry went a step further, as it did not specify any threshold trigger. The government had earlier announced that small deposits made in the banks by artisans, workers, housewives, etc, would not be questioned, up to an exemption limit of R2.5 lakh.

Sources added that the Finance Intelligence Unit was keeping tabs on bank officials who may be involved in the misuse of the Jan Dhan accounts. Since these accounts cannot hold more than R50,000 without know-your-customer compliance, the fresh deposits in them mostly tend to be slightly lower than that.

Jan Dhan accounts, along with Aadhaar seeding and mobile phones, form the Modi government’s “JAM” trinity for financial inclusion. Of the 25.5 crore Jan Dhan accounts, 13.69 crore are already Aadhaar-seeded while 19.44 crore RuPay cards have been issued.

A surge in net deposits in Jan Dhan accounts was seen immediately after the scrapping of high-denomination notes but the momentum slowed gradually: Net deposits peaked at R2,525 crore on November 13 but stood at R650 crore on November 19.

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