Govt probing cash flows into still-born Jan Dhan accounts

The government is looking into sudden surge of money into the zero-balance Jan Dhan accounts, after an unprecedented Rs2,00,000 crore of cash flooded the banking system within just two days of demonetisation of high value currency.

Finance minister Arun Jaitley said law enforcement agencies are keeping track of illegal currency changers offering to change the junked Rs500 and Rs1,000 notes, 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, adding that the departments concerned will act if anything improper is found in the deposits.

Reports also pointed to moneybags trying to usurp Jan Dhan accounts wil offers of commission to its holders as another way of converting their huge holdings of dead money to legal tender.

While the government is focusing on ensuring a smooth transition to new currency notes, Jaitley said, "the Enforcement Directorate and revenue department are keeping a close watch".

Cautioning those indulging in illegal usage of the demonetised currency, he said authorities will not hesitate to take action against any unlawful activity.

His statement comes amid reports that the old high denomination notes had been used to buy gold or were being exchanged for a premium.

ED is scrutinising as many as 67 foreign exchange dealers and Directorate General of Central Excise Intelligence is also monitoring prominent jewellery and bullion traders.

The finance minister said India should move towards plastic currency and more and more use of electronic modes of transactions to stabiles its economy.

Prime Minister Narendra Modi announced the withdrawal of Rs500 and Rs1,000 notes in a sudden move on the night of 8 November (See: All existing Rs500 and Rs1,000 notes denotified) but allowed people to deposit them in their bank accounts or exchange them with new Rs2,000 and Rs500 notes till 30 December, but has set a Rs2,50,000 limit for tax-free deposits and transition into new currency.

"The objective of the scheme was to get the idle cash into the banking system and if you multiply it (SBI's deposits) by 4-5 times, about Rs 2 lakh crore has become part of the banking system," Jaitley said.

He said the government had factored in that inconvenience may be caused in first few days but the long term advantages for the overall economy were far more, he said.

Businesses, he said, should brace for transacting through digital mode, cheques and payment gateways so that their lives remain simple going forward.

"As far as fake currency is concerned, government agencies are keeping an eye on that," he said.