Demonetisation: After large-scale wrongdoing emerges, government cracks down against banks

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Published: December 12, 2016 6:31:09 AM

With seizure of large amounts of unexplained old and new high-value currency notes by investigative agencies post demonetisation, the finance ministry on Sunday directed all public sector banks to maintain complete records of deposits by customers in old notes as well as new ones.

In a letter addressed to all the MDs, CEOs, CMDs of PSBs and the IBA chairman, the DFS has said maintenance of records regarding deposits was essential both in the banks' as well as customers' records. In a letter addressed to all the MDs, CEOs, CMDs of PSBs and the IBA chairman, the DFS has said maintenance of records regarding deposits was essential both in the banks’ as well as customers’ records.

With seizure of large amounts of unexplained old and new high-value currency notes by investigative agencies post demonetisation, the finance ministry on Sunday directed all public sector banks to maintain complete records of deposits by customers in old notes as well as new ones.

“The department of financial services (DFS) has asked all the PSBs and the Indian Banks’ Association (IBA) to ensure 100% that deposits of new currency is properly reflected in the customers’ counterfoils,” the finance ministry said in a statement.

In a letter addressed to all the MDs, CEOs, CMDs of PSBs and the IBA chairman, the DFS has said maintenance of records regarding deposits was essential both in the banks’ as well as customers’ records.

On November 8, the government demonetised old Rs 500 and Rs 1,000 notes, which accounted for 86% of the currency notes in circulation, to curb black money and terror financing through fake notes. Old notes are slowly being replaced with new Rs 500 and Rs 2,000 notes.

In the past few weeks, the I-T department, police and enforcement directorate have seized several hundred crore rupees in cash (old and new) and gold, which could not be explained by their owners and assumed to be black money. Scores of bank officers, involved in irregularities in deposits and withdrawals of notes, have recently been suspended.

The letter further said all the bank branches in the country be alerted to inform the customers about deposits in their accounts. This practice must be followed scrupulously and any deviation in this regard has to be prevented, and if noticed, dealt with firmly and immediately, the DFS told the banks. Bankers have been asked to file action taken in this regard by December 16.

Post-demonetisation, old currency notes were permitted to be deposited in bank accounts, and till November 24, exchange of old currency to a specified limit was also permitted. According to the latest available data, deposits in old notes was around R12 lakh crore.

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