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A MULTI-STATE urban co-operative credit society from Maharashtra is under the scanner of the Income Tax department after a probe found that it allegedly laundered Rs 900 crore in what officials claim is large scale tax evasion and money laundering by entities and individuals through banking channels between February 2015 and March 2017.
The tax probe found that Dyaneshwari Multi-State Urban Co-operative Credit Society Ltd, which was formed in 2013 and is based in Ahmednagar, allegedly received the money through unidentified operators in its bank accounts in the last two years. Sources said the society had a number of branches, including in Mumbai and Indore in Madhya Pradesh.
According to sources linked to the probe, the money was allegedly transferred immediately to the bank accounts of 58 individuals of no significant means of livelihood, shell companies and private entities through the Real Time Gross Settlement (RTGS) system.
“The cash was given a layer of legitimacy as RTGS was issued in favour of private persons and shell firms. About 2,000 RTGS transactions were executed by the society last year,” said sources.
The society allegedly used to charge a commission of 50 paisa for converting every Rs 100 of cash into RTGS, said sources. Typically, the society received cash deposits of Rs 1 crore to Rs 5 crore a day, sources claimed, citing investigation records.
“Since cash is deposited in the bank account of the co-operative credit society, which is legally allowed to accept money from its members, no suspicious transaction report is generated by the banks or the Financial Intelligence Unit (FIU) making such transactions completely safe for money launderers,” said an official, who has investigated several money laundering cases.
Under norms, the primary function of a multi-state cooperative credit society is to provide financial inclusion to its members.
In this case, the I-T department has raided the offices of the society and residences of its top officials and impounded hand-written diaries with records of cash receipts. It has also identified individuals and companies from the entertainment and gems and jewellery sectors, who have used this route to launder black money.
Sources said the diary entries of the society has identified cash operators by their “pet names”, such as Golu Bhai, Sameer Kaka and Patel Mama, among others.
When The Indian Express visited the main branch of the society located in a dilapidated building in Mumbai’s Zaveri Bazaar, its branch manager Nilesh Kamble claimed the tax department had only conducted a survey of the society.
“It was a survey by the tax department to know the details our members. We have given everything to the agency,” said Kamble. Akhilesh Joshi, the general manager of the society, did not respond to requests by The Indian Express seeking comment.
Sources said that the tax investigation also found several instances of violations of know your customer (KYC) norms by the society. Sources said the violations by Dyaneshwari came to light after the demonetisation of old Rs 1,000 and Rs 500 notes was announced on November 8.
The tax department traced the account of a Mumbai-based jeweller who allegedly received over Rs 5 crore from Dyaneshwari between November 8 and December 31, 2016.
In 2015, the Supreme Court had restrained co-operative societies in Rajasthan from carrying out any “banking activity”, as defined under the Banking Regulations Act, and further imposed restrictions on accepting deposits from general public.
The court noted that several such societies accepted deposits from nominal members as well as from public without obtaining a licence for a banking business from the Reserve Bank of India.
According to the website of multi-state co-operative societies, there are about 1263 registered societies, with Maharashtra having the highest number of such societies at 558.