How RBI official illegally converted Rs.1.51 crore in old notes to new ones?

Unconfirmed reports say he allegedly converted Rs.15 crore at SBM alone on a commission of 20-30 per cent

Details of how a senior special assistant with the Reserve Bank of India was involved in money conversion racket are emerging.

Although a news agency on Tuesday had quoted RBI Deputy Governor SS Mundra as saying that a junior functionary had been held in the racket, a day later various news reports revealed that a senior special assistant who oversees distribution of notes in the Mysore-Chamarajanagar belt, was arrested by the CBI from Kollegal, some 150 km from Bengaluru.

He has been suspended and the RBI is investigating.

K Michael had colluded with the head cashier of State Bank of Mysore (Kollegal branch), Parashiva Murthy, to convert at least Rs.1.51 crore in old notes to new ones, Bangalore Mirror reported. The CBI arrested Murthy on December 6, who revealed Michael’s role.

Unaware of the developments, Michael fell into the CBI’s decoy trap. “CBI officials contacted him and said they wanted to exchange their black money and gave Murthy’s reference. He readily agreed and asked them to reach Kollegal at midnight on December 9. He had brought new currency and Rs.100 notes. CBI officials nabbed Michael while he was exchanging money and seized Rs.17 lakh in new currency,”
Bangalore Mirror
quoted a CBI source as saying.
The Kollegal branch of SBM is where the RBI maintains one of its currency chests and Michael happened to be in the branch on the day Modi announced demonetisation. He helped Murthy convert the old currency. Between November 10 and November 13, Michael and Murthy converted at least Rs.1.51 crore in black money to white.

Unconfirmed reports say he allegedly converted Rs.15 crore at SBM alone on a commission of 20-30 per cent.

The report quoted an official as saying Michael used to accompany the money to be deposited in the currency chest (new notes moves from the RBI and government printing presses to the 19 RBI regional centres; from there, designated RBI officials accompany the cash to the 4,075 currency chests, which are maintained in the SBI and its subsidiaries and a handful of other nationalised banks; the money is then moved to other banks).

“Since Michael knew everybody, it is highly likely that he did business with other bank officials as well and not just Murthy,” the officer said.