Money changers, entry operators active in converting black money

Money changers, entry operators active in converting black money
The demonetisation of high value currency notes by the Modi government has suddenly made ‘money-changers’ and ‘entry-operators’ active in managing black money.

Money changers are reported to be using zero balance ‘Jan Dhan’ accounts, mostly held by BPL families, as a vehicle to convert old currency by depositing Rs 500 and Rs 1,000 notes up to Rs 2.5 lakhs in these accounts.

“I am getting handsomely paid for depositing up to Rs 2.5 lakhs in my ‘Jan Dhan’ account and withdraw money when the restrictions end,” a tea stall employee standing in a queue outside a bank here said.

Reportedly, money changers are taking 20-30 per cent cut for the entire transaction of changing old banned currency with new notes.

There are more than 25 crore Jan Dhan accounts and the money changers and entry operators are tapping this segment to convert black money to legal currency.

However, All India Federation of Tax Practitioner Vice-president Narayan Jain said such a tactic was not practical on a mass scale, although some of these accounts might be misused.

A building material supply syndicate member in the satellite township of Rajarhat told a news channel here that they were facing huge problem following the government decision.

“Most of our trade is transacted through hard cash. Now, we found out a way (through entry-operators). We manage to get Rs 70 lakhs for Rs one crore,” he said.

Income Tax department sources said they were keeping an eye on such entry-operators and had tracked one in the city recently.

Jain cautioned that the people using entry operators to convert their black money might get double-trapped.

“I-T will enquire once high value transactions take place, so it is advisable to disclose the source of the money officially,” he added.

Prime Minister Narendra Modi’s “shock-and-awe” move against black economy has hit it where it hurts the most. The demonetisation of Rs 500 and Rs 1,000 currency notes has broken the spine of “hawala” transactions that involve some of the biggest and most voluminous paperless money transactions in India.

According to market sources, the sudden demonetisation of Rs 500 and Rs 1,000 currency notes has virtually crippled informal and illegal money transactions.

“Prime Minister’s move to curb fake currency circulation will also hit illegal trades like hawala trade and dabba trade because these are potential sources of black money,” a senior government official told The demonetization of Rs 500 and Rs 1,000 currency notes has hit tipplers in Kerala, with liquor sales dropping leading to a consequent drop in its contribution to the state exchequer.

According to figures from the sole wholesaler of liquor and beer in the state - Kerala State Beverages Corporation, that has an average daily sales of close to Rs 29 crore, since Tuesday it has dipped to below Rs 20 crore. Since Tuesday midnight after Rs 500 and Rs 1,000 denominations were pulled out by the government, the daily sale of liquor fell to Rs 18 crore on Wednesday, from Rs 29 crore the previous day.

On Thursday, the sales climbed to Rs 20.15 crore and on Friday it fell below the Rs 20 crore mark.

Taxes that come to the state exchequer from the sale of liquor and beer account for as high as 80 per cent of the total sales value. With around 30 per cent drop in daily sales, the state will feel the heat more in raising funds. The total sales of KSBC for the month of October was Rs 1,030 crore.

According to studies, the profile of liquor users reveals that around 32.9 lakh people of the 3.34 crore population in the state consumes liquor, which includes 29.8 lakh men and 3.1 lakh women.

Around five lakh people consume liquor on a daily basis. Of this, around 83,851 people, including 

1,043 women, are addicted to alcohol. 

Govt looking into sudden spurt in Jan Dhan account deposits

Government is looking into sudden ‘propping up’ of money into zero-balance Jan Dhan accounts, after an unprecedented Rs 2 lakh crore of cash flooded the banking system within just two days of demonetisation of high value currency. 

Arun Jaitley said law enforcement agencies are keeping a hawk eye on illegal currency changers as well as those investing their money in gold and bullion to hide unaccounted wealth.”We are getting some complaints that suddenly monies have propped up in the Jan Dhan accounts, so there is a misuse and that is why the rationing in initial days takes place,” he said.    


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