Demonetisation impact: Shell companies move Rs.17,000 crore in and out of bank accounts


After the demonetisation exercise in November last year, the government’s attempt to clampdown shell companies is seen to be bearing fruit. Data from 56 banks have revealed that around Rs.17,000 crore has been deposited and withdrawn from bank accounts by 35,000 deregistered companies after demonetisation.

As an impact of demonetisation, the government has observed that around 35,000 shell companies have moved Rs.17,000 crore in and out of bank accounts.

It was found that one company had a negative balance as on 8 November 2016 at the time of demonetisation. Subsequently, this company was observed to have deposited and withdrawn Rs.2,484 crore. Another company was also seen to have 2,134 bank accounts.

The government has deregistered more than 2.24 lakh companies that have defaulted on compliance guidelines or have been inactive for more than 2 years. There are restrictions on the bank accounts of these companies and on the transfer or sale of their properties as well.

The Prime Minister’s Office had constituted a special task force that had five meetings with the corporate affairs secretary and the revenue secretary to initiate actions against the shell companies. This is expected to assist in the movement against black money.

The government has disqualified more than 3 lakh directors of firms that have failed to file annual returns or financial statements for three years until March 2016. It was also found that more than 3,000 of these disqualified directors were part of the boards of 20 companies, exceeding the stipulated limits.

The government will further ensure that director identification numbers will be linked to Aadhaar and Permanent Account Numbers for existing data and new applications alike. The Serious Fraud Investigation Office has also been requested to arrest anyone believed to be guilty under the Companies Act. The Act defines punishment for fraud as imprisonment for up to 10 years.

The finance ministry will include fraudulent activities as scheduled offence under the Prevention of Money Laundering Act as well. A committee has also been set up to make suggestions on how the disciplinary systems of cost accountants, company secretaries, and chartered accountants can be revamped.


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