Narendra Modi Government had taken another step to crack down black money in the country. In the recent developments the central government has restricted over 2 lakh bank accounts of dormant companies from accessing any of the company’s bank accounts.
A dormant company is one which is registered with the company house but, no active business transactions or receiving any income are considered as shell companies.Government is taking serious action against these dormant companies by shutting down nearly 200,000 bank accounts. This action is taken by the Finance Ministry to diminish official records from accessing their firm’s bank accounts.
The Finance Ministry said in a statement, the owners of the dormant companies and their nominated witness would not be able to operate bank accounts until they are legally restored. The statement also added, “The department of financial services has, through the Indian Banks Association (IBA), advised all banks that they should take immediate steps to put restrictions on bank accounts of such struck-off companies.”
A senior bank officer, those companies that remain only on paper and do not carry any business transaction can be used to launder money. Ved Jain, former president of Chartered Accountants of India (ICAI), “This move is a house cleaning exercise.”Tax Officials say the owners of such companies create false front including naming personal servants and drivers as board directors, to obscure the ultimate beneficiaries, conceal political investment, evade tax, commit fraud or manipulate tenders.
Prime Minister, Narendra Modi led government is taking precautionary measures aimed at preventing misuse of bank accounts that are engaged in fraud as well as strain the regulatory system.