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Is it our job to identify tax evaders? Bankers bearing the brunt of ever-changing norms
Posted by : Anonymous on Dec 21,2016 08:39 AM
The latest diktat of the government and the Reserve Bank of India on
— deposits of more than Rs 5,000 in scrapped currency can be made only once per account until December 30 — sparked chaos across the country as
were forced to turn into inquisitors, recording statements and demanding explanations from customers for seemingly taking government advice too literally.
Having borne the brunt of public anger for a cash shortage that’s now lasted a little over 40 days, bank officials were exasperated at the increasing demands being placed on them. Customers depositing more than Rs 5,000 have to explain to two bank officials why they waited so long to credit the old notes. The money can only be accepted after a "satisfactory explanation", RBI said.
"Bankers have become the soft target in this entire demonetisation exercise," said a Mumbai bank branch manager. "It is not the job of bankers to identify tax evaders… Most banks have reproduced the circular issued by RBI to branches and left it to the branch managers to interpret what ‘satisfactory’ means."
Some large banks are holding internal meetings to discuss the definition of "satisfactory", executives said. Banks also rushed to shut about 30,000
cash deposit machines
(CDMs) overnight to prevent any money being sneaked into accounts through that route. They will stay shut till the end of this month, officials said.
Monday’s notice contrasts with an earlier exhortation — when withdrawal of Rs 500 and Rs 1,000 notes was announced on November 8 — to avoid rushing to the bank to deposit as there would be enough time to do so until December 30.
"I was waiting for the queues to thin out and didn’t deposit my Rs 37,000 in old notes," said Varsha Gaonkar, a fashion designer in suburban Mumbai.
"Besides, the finance minister had also said there was ample time, but now the government says that I have to explain why I didn’t deposit the money." The change was effected after more than 80% of the money that ceased to be legal tender got deposited. Finance Minister Arun Jaitley said the money should be deposited on one go as repeated visits raised suspicions. "Today there are no exemptions... Now there is no further scope of earning old currency. So those who have old currency must go and deposit it in one go… if somebody goes every day and deposits old currency, it raises suspicion," Jaitley said.
The explanation by the customer has to be recorded so that there will be an audit trail, the central bank has said. Some banks are making audio recordings besides seeking explanations in writing.
"I just deposited Rs 17,000 in my account and was questioned by the branch manager as to how I got the money and why I didn’t come to the bank earlier —this is unnecessary harassment," said Laxman Kale, who works as a dabbawala delivering tiffins in Mumbai.
Banks have been left to deal with the latest course correction. "Queues have increased since today (Tuesday) morning and we haven’t got any direction from our head office on implementation of the new circular. We just know that we have to question customers on their source of deposits," said the branch manager of a private bank in south Mumbai.
Staff are having to make judgement calls and are concerned the wrong decision may land them in trouble later. The most common response bankers have got for deposits above Rs 5,000 is that customers were out of town or unwell.
"However, we cannot ask them for a medical certificate or travel tickets as proof," said one, distressed at the government putting onus on staff to identify suspicious customers.
Others such as HDFC Bank are asking customers to fill a form answering questions such as why the money wasn’t deposited earlier and querying the source of funds.
"HDFC Bank is clearly crossing the line by asking customers source of fund, which is really not their jurisdiction," a customer said. "The RBI circular on deposits says that a bank can accept deposits on receiving a satisfactory explanation but it does not talk about the source of funds."
Some customers produced certificates from accountants to show that they had cash in hand for business activities. "We have seen more and more walk-in customers since the announcement yesterday," said an executive at a state-owned bank. "There is no standard procedure and this latest circular is very subjective. If someone brings Rs 1 crore to deposit in his/her Jan Dhan account, then it is a suspicious transaction. Our branch managers will have to apply their own common sense."
Ray Dsouza, who works at an IT company in Pune, doesn’t need to give any explanations — she just has Rs 12,000 to deposit, which is why she didn’t rush to do so. Still, she said, "I wish the government would stick to its word and not change course every single week."
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