India’s demonetization makes low-deposit accounts ‘parking lots for black money’
Jan Dhan accounts, integral to the Modi government’s plan for financial inclusion and direct benefit transfer, were meant to have a transformational role in the uplift of the underprivileged, but, ironically, demonetisation has made them a parking lot for black money. Official sources told FE that these accounts saw transactions of R19,250 crore in the 10 days to November 19; over R15,000 crore was deposited and some R4,250 crore was withdrawn.
As on November 8, the day Prime Minister Narendra Modi announced that R500 and R1,000 banknotes would henceforth cease to be legal tender, Jan Dhan accounts held R45,637 crore, accumulated over two years and a month.
Deposits in these accounts, 25.5 crore at last count, rose by a third to around R61,000 crore between November 10 and 19, as people with hordes of unaccounted cash sought to convert them to legitimate wealth, according to data furnished by 27 public sector banks and 13 private banks. The account holders have either received rewards for allowing their accounts to be misused or been unaware of the third-party deposits made into their accounts.
According to a PTI report, Mamata Banerjee-ruled West Bengal leads the pack of states that has seen the highest deposits so far followed by Karnataka.