[vibbs]

Originally Posted by sachinpk

But think about people hoarding 1080 crores of rupees.
PS: I am also awaiting up to date figures from RBI, and without that more such doubts are only going to come up.

How is the money in co-operative banks unaccounted. Is it not possible for people to deposit perfectly legal money in these banks only because of the fact that they provide better interest rates? Yes the interest earned is probably not reported. But that makes only that part unaccounted, not the entire corpus. Pls correct me if I am wrong.

[sgiitk]

As for exact numbers checking would have to be done, to make sure that money is not counted twice. We are likely to be quite close to the actual amount in circulation. Fine, but imagine that the figure returned exceeds the amount in circulation. Then all hell breaks loose.

As far as I know the amount of forensic audit going around is staggering. It may be even a year or so tile the final results are known. I do hear that many who were nonchalant earlier are now running scared. They never expected such strict checking.

[kozhissery]

Originally Posted by vibbs

How is the money in co-operative banks unaccounted. Is it not possible for people to deposit perfectly legal money in these banks only because of the fact that they provide better interest rates? Yes the interest earned is probably not reported. But that makes only that part unaccounted, not the entire corpus. Pls correct me if I am wrong.

As there are no validation like KYC or any tabs kept from IT department with respect to the accounts of Co-operative sector, a general statement is being made in this aspect.

Some years back even the local Chitty companies, money lenders (like muthoot, manapuram etc) did not require such documents.

So it was easy place to park money in such institution.
I personally know some such cases where huge amount was parked and no question asked. Just take for instance I do remember where a person had done a land deal and got an amount of 50L+ in cash and just went to the local co-operative bank and kept it there till he could get a different piece of land (and gave advance). He used this account to keep money safe for all his transaction.
If the same amount had to be deposited in the normal bank then source would be needed and in this case he will have to pay a tax for at least 40L (that was the margin)

[Chetan_Rao]

Curious, if co-op banks operating outside KYC norms is a concern because it encourages unaccounted hoarding and illegal tax avoidance, why has that loophole been allowed to exist?

Why not bring all banking under KYC regulations? What's the downside of knowing one's customer and keeping records? Does implementing KYC norms negate the 'benefits' of a co-op bank compared to a regular bank?

[poloman]

OK guys after fighting indiscriminately on both sides for over 2 months, the jury is finally out. 94% of money of 15.5L Crore in 500 and 1000 rs notes have come back. Now one can continue to argue whether this figure is low or high. But I think a figure of 1L crore black money extinguished at source is a reasonable achievement. Another 1-1.5L can come in from IDS schemes. So I would rate this experiment worth the pain. Now surely one will come up with costs of disruption to GDP and other new cash management charges. But the intention was good and in long run will benefit the economy which will be much more cleaner and govt will have higher tax revenues.
http://www.business-standard.com/art...0401187_1.html

[vibbs]

Originally Posted by kozhissery

As there are no validation like KYC or any tabs kept from IT department with respect to the accounts of Co-operative sector, a general statement is being made in this aspect.

Didn't realise it was a general statement. In any case generalisation leads to more damage than good. Without any concrete evidence, the assumption that all money in cooperative banks are unaccounted money is akin to saying all those who drive powerful cars over speed on roads.

I agree that the way these banks operate, give enough leeway for anyone to park a lot of cash unaccounted or otherwise. But whose fault is it that the banks exist and operate outside the mandate of RBI? Certainly not the common population's.

I am not debating the possibility of these banks being a safe haven for black money hoarders, I am just not for the painting of all these with the same brush, just like how now a days its a fashion to assume anyone who has a lot of cash is on the wrong side of the law.

[kozhissery]

Originally Posted by Chetan_Rao

Curious, if co-op banks operating outside KYC norms is a concern because it encourages unaccounted hoarding and illegal tax avoidance, why has that loophole been allowed to exist?

Why not bring all banking under KYC regulations? What's the downside of knowing one's customer and keeping records? Does implementing KYC norms negate the 'benefits' of a co-op bank compared to a regular bank?

The working of co-operative bank (at-least in Kerala) is trust based. Usually all the members are local people. The power (President, Secretary etc) are held by some party members.
First you take a share of the co-operative bank then you start your account or whatever it is.
Technically the customer is known personally to the banking people so no need for KYC (Know Your Customer).
These banks need not furnish any details to RBI so the accounts don't come under the IT Scanner.
Even though RBI had mandated to follow the KYC guidelines since 2012/2013 not much has been done and everybody could just park their 2nd income without fear. And this de-monitization created a real mayhem for all the account holders of the co-operative bank as RBI instructed not to give/issue any new notes to these banks unless KYC norms are followed. As such many innocent persons also suffered.

Originally Posted by vibbs

Didn't realise it was a general statement. In any case generalisation leads to more damage than good. Without any concrete evidence, the assumption that all money in cooperative banks are unaccounted money is akin to saying all those who drive powerful cars over speed on roads.

I agree that the way these banks operate, give enough leeway for anyone to park a lot of cash unaccounted or otherwise. But whose fault is it that the banks exist and operate outside the mandate of RBI? Certainly not the common population's.

I am not debating the possibility of these banks being a safe haven for black money hoarders, I am just not for the painting of all these with the same brush, just like how now a days its a fashion to assume anyone who has a lot of cash is on the wrong side of the law.

http://www.kaumudi.com/innerpage1.php?newsid=85459
http://timesofindia.indiatimes.com/c...w/55719852.cms

[Lalvaz]

Originally Posted by poloman

OK guys after fighting indiscriminately on both sides for over 2 months, the jury is finally out. 94% of money of 15.5L Crore in 500 and 1000 rs notes have come back. Now one can continue to argue whether this figure is low or high. But I think a figure of 1L crore black money extinguished at source is a reasonable achievement. Another 1-1.5L can come in from IDS schemes. So I would rate this experiment worth the pain. Now surely one will come up with costs of disruption to GDP and other new cash management charges. But the intention was good and in long run will benefit the economy which will be much more cleaner and govt will have higher tax revenues.
http://www.business-standard.com/art...0401187_1.html

There's still time for money to be deposited by NRI's and Indians who were abroad, plus there's still money in Nepal, Bhutan, etc which needs to be considered. By the end of this exercise, I wont be surprised if that figure comes closer to 99%, so your estimate of the 1Lac + savings is still not going to materialize.

[perty]

Originally Posted by Lalvaz

There's still time for money to be deposited by NRI's and Indians who were abroad.

Also note that the RBI now seems to have closed the gates on old notes being deposited by resident Indians. Since yesterday, news channels are showing images of people protesting outside RBI offices which have put up sign boards stating that old notes wont be accepted.
Now that the gates are closing shut for old notes to come back in, the ones which didn't come back will be painted as black.

About a month ago, a discussion point at work was how good our Govt is at putting a patriotic or nationalistic spin on everything.

The gist was, if more money returned into the system, they would claim that now we have higher tax revenues. If less money came back, they would claim that all the money that didn't return was black and has been extinguished.

If the whole exercise (experiment, if you like, with people's lives) was a roaring success, then all credit would have gone to one man, just like it did with the surgical strikes. If it's a catastrophic failure, the blame rests with RBI/bankers.

[poloman]

Originally Posted by Lalvaz

There's still time for money to be deposited by NRI's and Indians who were abroad, plus there's still money in Nepal, Bhutan, etc which needs to be considered. By the end of this exercise, I wont be surprised if that figure comes closer to 99%, so your estimate of the 1Lac + savings is still not going to materialize.

I hope you are aware that we are looking at figures in lakhs of crores. I don't think NRIs or people in Nepal hold more than a few thousand of crores. Also there is a chance of double counting as described in the quoted article. So the figures are not going to change much. I think lot of self employed people, professionals and small business man have simply deposited their cash balances in to their accounts or their relative's accounts. So there will be a significant rise in the IDS in the coming months.

[vibbs]

Just because people put the cash into their accounts, it is wrong to assume that they have managed to convert their black into white. There will still be questions asked by IT and those who cannot substantiate the cash deposits with their declared income will have to pay tax and penalty. I believe a clear picture will emerge only after a few months and the quantum of black money thought to have been unearthed will only go up.

[RSR]

Wow!

So is it ~ 97% of the demonetised notes that have made their way back in to the banking system?

About 97 percent of the Rs 500 and Rs 1,000 in circulation until November 8 have been deposited back, the report said quoting "people with knowledge of the matter".

"Banks have received Rs 14.97 trillion ($220 billion) as of December 30, the deadline for handing in the old bank notes, the people said, asking not to be identified citing rules for speaking with the media.

http://www.news18.com/news/india/alm...t-1331397.html

I expected as much after the RBI's sudden refusal to continue sharing the details.

With some more SBN left to be deposited till June 31 by NRIs & those returning to India, plus the notes left stranded in countries like Nepal, close to 100% of the demonetised notes would have been accounted for.

Awesome! Just awesome!

[sgiitk]

Originally Posted by RSR

With some more SBN left to be deposited till June 31 by NRIs & those returning to India, plus the notes left stranded in countries like Nepal, close to 100% of the demonetised notes would have been accounted for.

What bugs me that if the amount surrendered exceeds the amount in circulation by even a rupee (or let us say, 1,000 crores). This will be a very serious matter. How did they come around, where has the RBI goofed?

[RSR]

Originally Posted by sgiitk

What bugs me that if the amount surrendered exceeds the amount in circulation by even a rupee (or let us say, 1,000 crores). This will be a very serious matter. How did they come around, where has the RBI goofed?

1) It's quite possible that some of the notes would be high quality fakes that didn't get detected by banks due to the mad rush at their counters. Overall quantity of such fakes would be fairly low, though.

2) The possibility of some "black liquidity" in the system is always there i.e. one serial number on two (or more) notes. Since the RBI is not an autonomous institution, nothing can be ruled out!

[mayankk]

Originally Posted by RSR

1) It's quite possible that some of the notes would be high quality fakes that didn't get detected by banks due to the mad rush at their counters. Overall quantity of such fakes would be fairly low, though.

2) Possibly some "black liquidity" in the system - one serial number on two (or more) notes. Since the RBI is not an autonomous institution, nothing can be ruled out!

I know people who have been given their REAL 1000 rupee notes back, marked by the banks as non-acceptable/fake. Wasn't there a case where one guy had had created a ruckus by asking one of these knowledgeable counterfeit detecting CSI tellers to show him the RBI guideline which allowed them to mark anything even slightly dubious, ending in the bank going "err, umm......."?