Grey market trying to sabotage demonetisation strike
Although the government has demonetised Rs 500 and Rs 1,000 notes as a surgical strike on money laundering, many ‘talented’ professionals are working to convert black money into white through grey market.
Some businessmen and agents involved in laundering money are offering deals to discount cash in lieu of a cheque. A discount rate of 25% to 30% is prevalent. Petrol pump owners, jewellers and cooperative banks are notorious means in the grey market to convert black to white.
Sources say petrol pumps are being approached for exchanging old high denomination (OHD) notes. Pump pump owners find it easy to convert black to white, while charging a rate of up to 5 per cent.
Jewellers, too, offer to convert black to white by accepting old Rs 500 and Rs 1,000 notes. Jewellery purchases apply VAT, but the bill is pre-dated i.e., before OHD notes were demonetised. Due to wedding season, jewellers can easily cite the reason of increased sales.
A similar pattern is being seen in some cooperative banks that are associated or directly controlled by politicians. Cooperative banks or societies are non-banking financial institutions. Some people having unaccounted cash in lakhs of rupees have managed to secure receipts of opening of fixed deposit account.
In such cases, the unaccounted cash will turn into white money, if people manage to produce all valid documents. In most of these banks, works, including issuing receipts, is done manually. As a result, some people managed to get the date of opening of the FD account, as prior to the PM’s announcement.
In its White Paper on black money, the Finance Ministry said according to the last government survey, 18 per cent of GDP, i.e. Rs 36,784 crore, is black money. Much money laundering in the country happens in mining, forest and liquor businesses.