Co-operative Bank in Money Laundering

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Cooperative banks have once again come under the scanner of the income-tax (I-T) department. While the department suspects a mega fixed deposit (FD) scam spread over several co-operative banks, there is another fraud through demand drafts worth less than Rs 50,000, which is the maximum that one can deal without producing PAN cards.

Permanent Account Number is not required to be produced for getting the demand draft below Rs.50000/- . Taxmen found that there were multiple demand drafts issued by certain co-operative banks from Maharashtra where payee name was absent.

As per I-T department’s primary probe, banks are managing unaccounted monies, mostly of politicians, running into at least Rs 10,000 crore in benami fixed deposits.

Simultaneously, I-T sleuths have also unearthed a fraudulent pattern of these banks issuing Demand Drafts up to Rs 49,900 to avoid furnishing pan card details and flouting Know Your Customer (KYC) disclosures.

As per RBI guidelines, demand draft of any amount more than Rs 50,000 is taxable under the income-tax head ‘income from other sources’.

According to taxmen, the primary information point an accusing finger at half-a-dozen cooperative banks in Maharashtra. Other state cooperatives are also being looked into.

According to I-T sources, these banks are suspected of flouting RBI norms by managing huge chunks of money by converting them into smaller fictitious deposits, on which they earn interest as well.

These people usually have such deposits in the name of drivers, housemaids or unknown names who are not even aware of such deposits in banks.

Apart from Fixed Deposits, what caught the attention of sleuths is the issuance of a series of demand drafts – of Rs 49,900 or around, without any payee’s name written on the face of it, according to a senior I-T official.

These Demand Drafts, most of which are purchased by textile traders, as per the initial information available, get exchanged during purchase of goods, which then get circulated within their fraternity until the last holder encash the draft a day before the three-month expiry date.