Co-ops can't accept cash under amnesty scheme

The government on Friday barred co-operative banks from accepting deposits under the Pradhan Mantri Garib Kalyan Yojana (PMGKY).

The decision comes amid reports of massive irregularities in the account books of these lenders after the November 8 demonetisation. The amnesty scheme, aiming to lock part of unaccounted income in long-term deposits, was notified last month. It is open till March 31.

According to its original provisions, anybody declaring undisclosed income could pay a tax of 50% and park 25% in a four-year deposit in any bank. About Rs 16,000 crore was deposited in co-operative banks after the note ban.

But after Friday’s decision, co-operative banks will not be eligible to receive such deposits. “It is clarified that co-operative banks are not authorised banks to accept deposits under PMGKY, 2016,” an official statement said after the government amended an earlier notification dated December 16, 2016.

Holders of unaccounted cash will have to pay tax and then fill up a bank challan to benefit from the four-year deposit scheme. Authorised banks have to electronically furnish details to the revenue department the next working day to enable verification before the deposit is accepted under PMGKY.