Unfazed by demonetisation, the rich in Kerala continue laundering black money

KOCHI: It seems that high-net-worth individuals and businessmen are unperturbed by the Central Government’s demonetisation drive, as most of them have found new ways to launder black money. They use overdraft and NRI accounts in a big way to beat the witch-hunt against black money hoarders. “Demonetisation has not affected most businessmen as they use the overdraft facility to launder black money.

"For example, a person having an overdraft of Rs 2 crore can close the account by depositing his unaccounted cash in it, claiming that it is income from business,”, said a Kalady-based businessman on condition of anonymity.

“Several overdraft accounts were closed in the last two weeks,” he added. The modus operandi: Overdraft facility allows entrepreneurs to avail credit against stock and receivables (revenue). Banks allow up to 75 percent overdraft facility. Such credit, availed in the past, could easily be settled by paying unaccounted money, claiming it to be income from the business.

“In some cases, even persons who hoard black money approach businessmen who have overdraft facility, and get their money laundered on commission basis. The transaction can be done easily with assistance of bank managers as the facility is considered their prerogative. Another target area is NRI accounts, which are operated mainly with accounted money.

Additional deposits of a few lakhs, without disclosing the source, does not make much of a difference. Currently, some desperate persons are ready to sacrifice even 50 percent of their unaccounted money,” said a Kochi-based chartered accountant. It should be noted that the government has increased the limit of withdrawal from current accounts to Rs 50,000 per week.

Bank Employees Federation of India-Kerala general secretary S S Anil said there was no mechanism in place to monitor cases wherein black money is converted using the overdraft facility.

“The manpower shortage in the Income Tax Department makes it impossible to book all persons who hoard unaccounted money. Also, there is no mechanism to audit each and every account,” he pointed out.