 "Black money")
The special investigation team (SIT) on black money has asked the Reserve Bank of India (RBI) to develop an institutional mechanism, in consultation with the revenue department, to share export-import and foreign exchange (forex) transaction information with investigative agencies, to curb illicit financial flows out of the country.
In an August 11 letter to the central bank, the committee, headed by Justice M B Shah (retired), called for a mechanism to allow sharing of information of RBI databases with enforcement authorities – the department of revenue intelligence (DRI) and Enforcement Directorate (ED) - for verification.
“The SIT chairman has asked the RBI for an institutional mechanism for sharing of data in its various databases with enforcement authorities,” a finance ministry tweet said on Monday.
The three databases managed by the RBI - referred to by the SIT - are the foreign exchange transactions electronic reporting system (FET–ERS), export outstanding data and monitoring of advance remittances against imports.
The panel has also asked the revenue department to identify a single-point agency within the department, which could access information from three databases and thereafter disseminate them to various enforcement agencies.
All authorised dealers are obligated to report each forex transaction in FET–ERS. The SIT has suggested that this data should also capture the PAN (permanent account number) of the importer or the exporter and that the RBI take necessary steps to get the same done on an urgent basis.
The SIT feels that the data can be shared, only by having one agency such as the Central Economic Intelligence Bureau (CEIB) or any other agency, as a data warehouse. “From the said data warehouse, various agencies can gather the relevant information for taking early appropriate action,” it said.
Meanwhile, the committee also recommended the ED, DRI and the ministry of commerce to analyse under-invoicing of trade bills to channel black money.
“The SIT had requested the RBI to provide data on advance remittances sent abroad for which corresponding bill of entry has not been received by the authorised dealer. The SIT had also requested the RBI to provide details of export outstanding for more than a year. The data provided by RBI, on both the above counts, clearly showed that there are gaps in monitoring the above trade flows, which are used by unscrupulous elements to take out precious capital outside the country, thus, damaging the fabric of the Indian economy,” the finance ministry statement said.
The SIT, appointed by the Supreme Court in its report last month, had recommended a Rs 3 lakh cap on cash transactions and a Rs 15 lakh limit on cash holdings to curtail black money in the economy.
FLUSHING OUT BLACK MONEY
- In the light of “gaps in the regulatory framework”, the SIT has impressed upon the RBI the imperative need to establish the institutional mechanism for sharing of data with the central bank in its various databases with enforcement authorities
- The data, available with the RBI, could be “cross-checked with other information available with enforcement authorities and illicit financial flows could be curbed,” the SIT said
- In a letter to RBI governor on August 11, the SIT - headed by Justice M B Shah (retd) - underlined the need for creating a data warehouse from where various agencies can gather relevant information for taking early appropriate action
