Banks may share transaction data with money sleuths

FinMin's project will enable tax man to track electronic transactions like RTGS or NEFT.
Shrimi Choudhary reports.
Illustration: Uttam Ghosh/Rediff.com

The finance ministry is planning a pilot project that will allow tax authorities to access unique transaction reference numbers generated by banks.

The ministry was working on the feasibility of the project, said a tax official.

The ministry is considering setting up a dedicated team comprising the Reserve Bank of India (RBI) and income-tax department officials to maintain records of all unique transaction reference-related information.

Unique transaction reference numbers can be provided on the basis of inputs received from the Financial Intelligence Unit and other sources.

"At present, there is no provision for sharing unique transaction reference numbers with investigative agencies. Through this we will be able to identify transactions in any electronic form like real-time gross settlement (RTGS) or national electronic funds transfer (NEFT)," the official said.

Typically, this data is available with the remitting and receiving banks.

Banks are required to send monthly data of all such transactions to the RBI.

The tax department fails to track benami deals split into multiple transactions that travel through various banks to reach the beneficiary.

The move could help in following the money trail even if transactions were split, the official said.

"The digital trail is the only hope we have in tracking benami transactions. However, I think it would be really difficult to implement such a central database of RTGS transactions at the RBI or any such agency as thousands of such transactions happen on a daily basis at each bank," said Ashvin Parekh, managing partner, Ashvin Parekh Advisory Services.

"The RTGS data would have crossed settlement across banks rather than individual customer data. I believe each bank has to compile the report based on the transactions that have happened across their de-centralised data bases,: Parekh added.

The government has enacted the Benami Transactions (Prohibition) Amendment Act, 2016, which provides for imprisonment of up to seven years and a fine of up to 25% of the fair market value of a benami property.

It also empowers the government to confiscate deposits of people using bank accounts of others to launder money.