Track Demand Drafts used to convert old to new, RBI tells banks

Track Demand Drafts used to convert old to new, RBI tells banks

Senior bank officials with at least three different banks told The Indian Express that the RBI in its letter sent to the banks has asked them details of all the DDs made during the demonetisation period and later cancelled.

While numerous cases of illegitimate conversion of old Rs 500 and Rs 1,000 notes were reported at various bank branches during the 50-day demonetisation window, the Reserve Bank of India has centred its investigation on unusual transactions at bank branches that include those who got demand drafts (DD) made during that period using old currency notes and later cancelled them, thereby converting old notes into new.

In a letter sent by the RBI, banks have been asked to furnish details of not only the kind of deposits and withdrawals witnessed by them during the demonetisation period but also details relating to loan accounts where customers prepaid their outstanding in cash and the deposit and withdrawal seen in Jan Dhan accounts.

Senior bank officials with at least three different banks told The Indian Express that the RBI in its letter sent to the banks has asked them details of all the DDs made during the demonetisation period and later cancelled.

The RBI query to banks follo ws reports that many individuals were using the DD route. “Several branches across banks reported individuals coming with old Rs 500 and Rs 1,000 currency who were getting DDs made. Later, they got them cancelled. One can hold the DD for a period of up to three months, the draft-making charges and cancellation charges are low, this made many exploit this route. The RBI seems to be collecting details of such individuals who may be probed later,” said the banker.

A banker said that in the letter, RBI has asked for the number of such transactions witnessed by them and has not asked for details of individual accounts. “It seems the idea is to currently establish the quantum of such transactions and depending on the magnitude they may later ask for details relating to individual cases for investigation,” said a top official with a private sector bank. An email sent to RBI seeking details did not elicit any response.

The RBI query on DDs comes in addition to the continuing probe by Income Tax authorities in cases where deposits by individuals into their accounts does not match their income tax returns. While numerous cases of impropriety by bank officials came to the fore at the time of demonetisation, information shared by the government in Parliament in response to a question on February 3, shows that public sector banks suspended 156 officials and filed 26 cases with the local police or CBI regarding criminal cases. Private sector banks put 11 employees under suspension where bank employees were found involved in “irregular exchange of transaction” of old notes.

Source:Indian Express