Risk to the demonetization scheme and solutions

Demonetization is an excellent and laudable step, but as said wisely, "Devil lies in the details". Somehow the bureaucrats responsible for executing the scheme, seems to have been clueless about some of the ground conditions, such as

1. Banks are free to open new account without any centralized verification of data
2. There are lot of fake Jan Dhan accounts, which were opened by banks, to meet their targets. 

These 2 factors have led to creation of multitude of fake accounts.

Example 1 - Bank Manager colludes with a business man and opens 200 accounts on the basis of fake documents with no verifiable details and fake address. Simply the business man will deposit money in those fake accounts

200*say 2 lacs each = 4 Cr deposited

Use withdrawal slips and withdraws 20k daily from each account. He will be able to convert his black into white in 10 working days

Example 2 - Bank Manager knew he has created 1000 fake Jan Dhan Accounts to meet his targets in the past. He looks around and colludes with his favorite customers to convert black into white


Consider this, there are 8 Cr JD accounts and most of them are with dubious details. Even with a highly optimistic estimate, at least 30% of them are either fake or non-verifiable. So, 2.4 Cr fake accounts. This is very dangerous for the scheme.

Solutions needed to be implemented with immediate effect

1. Banks should be barred from opening any new account without verifying address physically and without PAN card
2. JD accounts should be barred from any transaction beyond 10k per month. If someone wants more limit, let them have regular accounts or they would already have that, if they have more than 10k income. 
3. Set examples and create detterence by sending notices en-mass and do some arrests of bank managers also, so that the whole banking community, gets the message, loud and clear