Kanpur cash seizure: RBI officials under scanner for illegal currency exchange; not a first for the central bank

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New Delhi | Updated: January 19, 2018 12:08:11 PM

Police suspect the role of bank officials in facilitating the exchange of around Rs 97 crore in old currency notes recovered from Kanpur. A senior police official said the role of officials at the RBI's Kanpur branch was also under scanner.

Kanpur cash seizure, demonetisation, demonetised currency, reserve bank of indiaRBI officials working at its Kanpur branch are under police scanner following the seizure of Rs 97 crore in demonetised currency.

Dramatic visuals showing a bed of cash in demonetised currency following the massive recovery from a residential building in Uttar Pradesh’s Kanpur has left police and Income Tax officials flummoxed. The seizure of Rs 97 crore cash in old Rs 500 and Rs 1,000 notes raises an obvious question – how did the accused plan to get the currency converted into legal tender?

News agency PTI reported on Thursday that the police suspected the role of bank officials in facilitating the exchange. Alarmingly, the role of officials at the Kanpur branch of the Reserve Bank of India is also under the scanner, police said. “We are probing the role of RBI Kanpur branch in this matter. It is being done on suspicion of involvement of RBI staff in the case,” SSP Akhilesh Kumar Meena told PTI.

So far, as many as 16 people including a builder were arrested in connection with the seizure of notes kept in gunny bags and stacked inside a bed from the builder’s ancestral house. They have been booked under various sections of the IPC and the Specified Bank Notes (Cessation of Liabilities) Act, which makes possession of more than 10 pieces of old Rs 500 and Rs 1,000 notes a criminal offence, attracting fine of Rs 10,000 or five times the cash held, whichever is higher.

However, it is the role of the central bank in this suspected illegal conversion racket that should sound warning bells. For, it is not the first time that the RBI has fallen under the scanner for illegal currency exchange post demonetisation.

Ever since Prime Minister Narendra Modi’s drastic November 8 announcement banning old Rs 500 and Rs 1,000 notes in 2016, there have been numerous reports pointing to the alleged involvement of RBI officials in converting scrapped currency into legal tender. Sample these:

In December 2016, a month after the demonetisation decision was announced, the Central Bureau of Investigation arrested two RBI officials, including a senior special assistant in Bengaluru for alleged involvement in illegal currency exchange worth Rs 1.99 crore. The RBI officials were among nine people arrested. Reports claimed that the official, in collusion with others, was facilitating the exchange of notes at a premium.

“It is alleged that both the accused and other unknown officials of RBI, Bengaluru entered into criminal conspiracy with unknown others,” CBI spokesperson Devpreet Singh said.

This incident came just days after another RBI official was arrested by the CBI for allegedly trying to exchange Rs 1.5 crore in illegal currency into legal tender. The official was suspended by the RBI and a probe ordered.

The latest case puts the spotlight on the role of RBI officials again, this time for a much larger amount. While the case is still in the preliminary stages of investigation, the remark by the police does raise eyebrows on the role of government and private bank officials as well as those of the RBI in defeating the government’s stated objective of countering black money, something that demonetisation aimed to achieve.

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