In view of a large number of reports of money laundering through Jan Dhan Yojana bank accounts, the Reserve Bank of India (RBI) has placed withdrawal limits. Fully KYC compliant Jan Dhan account holders will be allowed to withdraw Rs 10,000 in a month while limited or non KYC compliant account holders may be allowed to withdraw Rs 5,000 per month.
The RBI added that branch managers may allow withdrawals beyond Rs 10,000 within the current applicable limits (Rs 24,000 per week) only after ascertaining the genuineness of such withdrawals and duly documenting the reasons on the bank’s record.
The balance held in Jan Dhan accounts has shot up following the demonetization of Rs 1000 and Rs 500 notes. For the week ended November 23, Jan Dhan accounts held Rs 72,834.72 crore from Rs 64,252.156 crore from the week ended November 16.
The demonetization drive was started on November 8 and the balance in Jan Dhan accounts stood at Rs 45,636.60 crore as of November 9.
Currently, there is a Rs 24,000 weekly withdrawal limit. Many banks including ICICI Bank and HDFC Bank are rationing how much people can withdraw in cash. ICICI Bank’s managing director and CEO Chanda Kochhar avoided answering questions that cash was being rationed out to customers in a recent call with the press. Publicly, most banks have gone on record that there is no need for panic and that there is ample amount of cash in bank branches.
Opening multiple accounts to launder money
There have been a number of instances where bank employees have been giving advice to individuals who wish to evade taxes and launder black money.
A colleague asked by auto driver if he wanted his money laundered! Charge 20%, white money return after 2 months #DemonetisationLaundry :):)
— Sunil Jain (@thesuniljain) November 24, 2016
CNN Network 18 has a report which shows that some private bank employees are helping people who wish to launder black money by opening different accounts. The video shows an Axis Bank employee in Sonipat who is advising an undercover reporter to open multiple accounts and deposit Rs 2.5 lakh to avoid the tax radar. He further advises the undercover reporter not to use an Aadhaar card for opening the account as it can be traced by the government. Watch the video here.
No change in zero balance accounts
However, it is curious to see that the overall number of zero balance accounts has only marginally decreased following the demonetization. At the end of the week ended November 9, the number of zero balance accounts stood at 5.93 crore compared to 5.89 crore.
Note that a large number of the accounts opened through public sector banks have been dressing up their data to show lower number of zero balance accounts. A report from Indian Express points out that public sector banks have been adding Re 1 in these accounts to give the appearance that they are being used by people. RTI information from 18 public sector banks and 16 regional banks showed 1.05 crore accounts only held Re 1 balance in them. There were a few cases where Rs 5 or Rs 10 was deposited by banks.