Black money clean-up: RBI, banks try to plug the Jan-Dhan loophole at ‘source’

RBI’s directive to banks asking to seek source of the money being deposited has started to yield results

Written by Sunny Verma , George Mathew | New Delhi | Mumbai | Published:November 26, 2016 1:46 am
Demonetisation, demonetisation goals, demonetisation effects, demonetisation debates, black money, black money clean up, black money india, banks, RBI, Reserve bank of india, SBI, Banks india, banks black money, banks demonetisation, Jan dhan account, jan dhan scheme, KYC, India news, indian express news The finance ministry and the RBI are reported to have started to keep a close watch on these accounts after a record Rs 21,000 crore were deposited into Jan Dhan accounts in two weeks since November 9. (Express file photo)

Following red-flags raised over a sharp surge in the Jan-Dhan accounts since November 8, banks have been specifically instructed to seek details on “source of funds” from customers wanting to deposit Rs 50,000 or more at one go in these no-frills accounts, resulting in a sharp tapering down of inflows into accounts since Thursday.

After nearly 30 times jump in deposits in Jan-Dhan accounts within two weeks of the government’s decision on withdrawing old Rs 500 and Rs 1,000 notes, the Reserve Bank of India is learnt to have directed banks to exercise caution on accepting large deposits into such accounts, a source in the banking sector said. Consequently, both state-owned and private sector banks have specifically asked customers to offer an explanation on the source of funds or their PAN cards for deposits of Rs 50,000 or above being made at one go. The lack of such details with a number of Jan-Dhan account holders across centres has resulted in many account holders not being able to deposit money, sources said. “Deposits are not being accepted from account holders unable to provide documents on source of funds,” said a lead district manager for the Jan-Dhan scheme in Uttarakhand.

The finance ministry and the RBI are reported to have started to keep a close watch on these accounts after a record Rs 21,000 crore were deposited into Jan Dhan accounts in two weeks since November 9 – the day the NDA government’s demonetisation decision kicked in. The central bank and investigative agencies are also looking into possible misuse of such accounts on a sample-basis, government sources said. The investigative agencies have already prepared a list of over 2000 such accounts suspected of misuse.

The RBI and the finance ministry did not respond to specific queries sent by The Indian Express on Friday regarding reports of banks not accepting deposits into the Jan-Dhan accounts.

“Many of the Jan-Dhan accounts are based on “simplified KYC (know your customer)” guidelines. This means they have not submitted PAN numbers while opening the accounts. So naturally they (customers) can’t deposit more than Rs 50,000 in an account. If a customer wants to deposit more than Rs 50,000, he or she needs to submit PAN card copy. Otherwise there are no restrictions on accepting deposits in any accounts,” a senior official at State Bank of India said.

Jan-Dhan accounts which are “fully KYC compliant” turn into normal bank accounts after a year, and holders can deposit more than Rs 50,000 in such accounts, a senior finance ministry official said. In Jan-Dhan accounts with simplified KYC, a customer cannot otherwise hold more than Rs 50,000 at any point in time. Many banks would have turned away customers coming to deposit higher amount in such accounts, said a senior official of a nationalised bank. The government data shows that only 13.69 crore out of the total 25.51 crore Jan -Dhan accounts were seeded with Aadhaar details as on November 9.

The RBI had on Tuesday cautioned people against depositing other people’s hoarded cash into their Jan-Dhan accounts. “Members of public are cautioned that exchanging /dealing in specified bank notes (old Rs 500 and Rs 1000 notes) in unauthorised manner is illegal and liable to strict punitive action,” the RBI said.

When Jan-Dhan scheme was launched in 2014, the banking regulator had said those persons who do not have any of the ‘officially valid documents’ can open ‘small accounts’ with banks. It was a simple process: A ‘small account’ can be opened on the basis of a self-attested photograph and either a signature or thumb print in the presence of an official of the bank.

The RBI had said such accounts have limitations regarding the aggregate credits (not more than Rs 1 lakh in a year), aggregate withdrawals (not more than Rs 10,000 in a month) and balance in the accounts (not more than Rs 50,000 at any point in time).

“These small accounts would be valid normally for a period of twelve months. Thereafter, such accounts would be allowed to continue for a further period of twelve more months, if the account holder provides a document showing that she/he has applied for any of the officially valid document, within twelve months of opening the small account,” the RBI then said. Officially valid documents include passport, driving license, voter ID card, PAN card, Aadhaar card and NREGA job card.