Noose tightens around 5,800 shell firms

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Mains Paper 2: Governance | Citizens charters, transparency & accountability and institutional and other measures

From UPSC perspective, the following things are important:

Prelims level: Read B2B.

Mains level: One more step by the government to counter money laundering, black money issues.


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Collection of data

  1. The government has collected startling data on multiple accounts of 5,800 shell companies
  2. These 5,800 companies are from those 200,000 companies which were struck off by the registrar of companies (RoC)

How government got these shell firms?

  1. The government had asked for data from banks about over 200,000 companies whose accounts were frozen
  2. The data from 13 banks reveals that 5,800 companies have more than 12,000 accounts
  3. The companies deposited and withdrew huge amounts from banks post-demonetisation, while they had meagre deposits before November 8, 2016
  4. According to an official statement these companies, deposited more than Rs 4,570 crore in their accounts and withdrew Rs 4,552 crore, post-demonetisation
  5. Before demonetisation, these companies had a balance of Rs 22.05 crore, in banks

Other steps taken by the government

  1. The investigative agencies have been asked(by the government) to complete necessary investigation in a time-bound manner
  2. The government also disqualified a number of directors associated with these companies. There are around 100,000 directors

Back2basics

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Black Money – Domestic and International Efforts
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