As many as 2,400 public sector bank branches have reported suspicious high-value transactions after the government announced demonetisation of 500 and 1000-rupee bills, officials have said.
These transactions were carried out between November 8, when the government made the demonetisation announcement, and December 30, the last day of exchanging the withdrawn banknotes.
Officials said most of the banks which have reported the suspicious transactions are in Uttar Pradesh, Madhya Pradesh, Rajasthan and West Bengal and there are allegations that a section of bank employees were involved in money laundering.
A transaction above Rs 2.5 lakh by an individual is considered “high-value” and the Income Tax department have already started sending out notices to individuals under the scanner.
Prime Minister Narendra Modi’s shock announcement had led to a rush in banks by people and business houses to exchange the old notes, besides sparking a crippling currency shortage.
Modi had described the exercise as a surgical strike on black money though opposition parties were highly critical of the government over the cash crisis.
A senior government official said that over 70% of the depositors at the branches under scanner carried out transactions of more the Rs 2.5 lakh.
Details of all high-value transactions have been sought by the department of financial services and these will be scrutinised with a “fine toothcomb”, not only to identify the customers but also to examine if bank officials have had any role to play.
The Central Vigilance Commission and the Reserve Bank of India are also looking into the functioning of some private sector banks.
A senior government official, who did not wish to be identified, said recordings of closed-circuit television cameras (CCTVs) will be examined to zero in on potential instances of money laundering.
Central vigilance officers (CVOs) have also been asked to submit their reports separately. A weekly meeting is being held with all CVOs and the senior finance ministry officials.
Finance ministry sources said that all these branches have also come under the scanner of the Income Tax department and the department of financial services.
“Regular meetings are being held with the CVOs, we will decide on the future course of action based on their reports,” GC Murmu, additional secretary, department of financial services told Hindustan Times.
The finance ministry could come up with a new guideline on governance and frauds based on the reports provided by the CVOs. Meanwhile, the CVC is expected to put in place a new manual to address cyber frauds within April.
The CVC has already circulated the draft manual to banks and other stakeholders for their comments.
Since November 8, about 400 officials of both public and private banks have been suspended for alleged money laundering. Notices have been sent to all the suspended officials seeking their response.