Finance Ministry issues list of 9,500 'high-risk' financial companies
As authorities probe the biggest banking fraud in Indian history, the Finance Ministry has released a list of nearly 9,500 'high-risk' non-banking financial companies (NBFCs). These companies were found to be in violation of the Prevention of Money Laundering Act's rules during demonetization. Millions of rupees were exchanged or deposited in the system in violation of rules after the sudden November 8, 2016 announcement.
Demonetization took out Rs 15.44L crore from circulation
Before the PM suddenly announced demonetization on November 8, 2016, there were 1,716.5cr notes of Rs. 500 and 685.8cr notes of Rs. 1,000 in circulation totalling Rs 15.44L crore, RBI had said. The government had allowed people to deposit old notes till December 30. Subsequently, long queues were seen every day at banks and post offices. People had to stand in line for hours.
PMLA issued rules to regulate cash exchange post demonetization
According to the PMLA, all NBFCs have to report cash transactions of over Rs. 10L to the Financial Intelligence Unit (FIU). They are to maintain records of all transactions and the identity of their clients and their beneficial owners for five years, and verify the same to the FIU if needed. A principal officer has to oversee operations at such institutions.
These NBFCs were found to have exchanged cash illegally
But many NBFCs as well as rural and urban cooperative banks were found to have exchanged notes of people after demonetization illegally. Contrary to regulations, they were receiving cash deposits and in lieu, issuing fixed deposits and cheques back-dated to an earlier time. The FIU has now released a list of 9,491 such NBFCs. The full list can be found here.
