Banks report Rs17,000-cr transactions by shell companies post demonetisation

Nearly 35,000 companies of the 2.24 lakh that were deregistered deposited and withdrew a total of Rs17,000 crore after the 8 November 2016 demonetisation of high-value currencies, the government stated on Sunday.

The figure is based on data prepared on the basis of information on 58,000 accounts received from 56 banks, the ministry of corporate affairs said.

The government had so far deregistered 2.24 lakh companies for remaining inactive for two years or more and disqualified about 3.90 lakh directors for failing to file annual returns for three financial years – 2013-'14 to 2015-'16.

Over 3,000 disqualified directors are on the boards of in more than 20 companies each, which is beyond the limit prescribed under the law.

Following the striking-off of defaulting companies form the registry of companies, restrictions have been imposed on operation of their bank accounts in accordance with the law.

Further, preliminary enquiry on the basis of information received from 56 banks in respect of 35,000 companies involving 58,000 accounts has revealed that an amount of over Rs17,000 crore was deposited and withdrawn post demonetization.

In one case, a company which had a negative opening balance on 8 November 2016, deposited and withdrew Rs2,484 crore post-demonetisation, it was found.

Apart from the restrictions on bank accounts, action has also been taken to restrict sale and transfer of moveable and immoveable properties of struck-off companies until they are restored. State governments have been advised to take necessary action in this regard by disallowing registration of such transactions.

One company was found to have as many as 2,134 accounts. The information with respect to such companies have been shared with enforcement authorities, including Central Board of Direct Taxes(CBDT), Financial Intelligence Unit (FIU), Department of Financial Services (DFS) and Reserve Bank of India (RBI), for further necessary action. Companies have also been identified for inquiry/inspection/investigation under the Companies Act, 2013 and necessary action is underway, the government release stated.

The prime minister's office has constituted a special task force (STF) under the joint chairmanship of revenue secretary and corporate affairs secretary, to oversee the drive against such defaulting companies with the help of various enforcement agencies.

The STF has so far met five times and action has been initiated against several defaulting companies, which is expected to help in the drive against black money, the release stated.

The government has authorised the director, additional director or assistant director of SFIO to arrest any person believed to be guilty of any fraud punishable under the Act. Steps are underway for setting up National Financial Reporting Authority (NFRA), an independent body, to test check financial statements, prescribe accounting standards and take disciplinary action against errant professionals.

Action is also being initiated against professionals guilty of fraud and all complaints against them are being reviewed. A high level committee (HLC) has been constituted for suggesting revamp of the disciplinary systems of chartered accountants, company secretaries and cost accountants.

With a view to checking the problem of dummy directors, action is underway to seed Director Identification Number (DIN) with Permanent Account Number (PAN) and Aadhaar at the stage of DIN application through biometric matching for new applications. The same may be extended to legacy data in due course.

Finally, a separate initiative is underway to develop a state-of-the-art software application to put in place an 'Early Warning System' (EWS) to strengthen the regulatory mechanism, says the release.