Financial Transaction: Role of underworld

Guest Author’s Profile:- 

Prof. Jaideep Chatterjee has been awarded with best performer by Patna Management Association for an extra ordinary contribution in the difusement of Managerial thoughts and Culture of Management Education across the state of Bihar as a Teacher and Thinker of the Management Studies.

He has represented different types of Governmental and non Governmental organization and assisted to design and develop various methods of community development programs in Himachal Pradesh, Haryana, Punjab, U.P. and Bihar.

Prof. Chatterjee was one of the members of Bihar planning board as the representative of Patna Management Association from 1996-99. Presently pursuing for PhD in Business Management from A.M.U. through A.I.M.A. and has been engaged as the guest faculty in as many as five different management institutions at Durgapur in West Bengal.


Financial Transaction: Role of underworld

At present, one fourth of our total financial transactions being remitted through illegal practices by collective group of  persons, neither they nor their source of money so far been physically known to ordinary and most ordinaries, though the operation and operators are very much within the society, where we live and share everything together.

The illegalities had been adapted during the 70’s as one of the mode of livelihood to gain decent full money in order to lead a dignified life within shortest span by a few  smugglers of gold , later joined  mainly  by drug, arms and ammunition supplier , preferably from almost every metro cities across the country. Today which popularly known as Hawala racket and have been recognized as the most favorable route of damaging the ¼ of the economy, a portion could have been utilized if those transactions would have taken place through formal route as did by law abiders of the same land.

Just after the indirect involvement of dishonest bureaucrats, police officials, politicians and distrustful traders in such money transaction Hawala became another recognized source of easy money even for the elite group of Indian society. The source of hefty amount of transactions for example drug paddling, women & child trafficking and smuggling of bovines have taken place in more organized form, as the earlier favorite money minting transactions” smuggling” of gold and arms and ammunition were reshaped in the form of cottage industries and handed over to petty criminals, even between the semi/educated youth of the prudent locality.

How the process recognized by the agencies like, Income tax, Enforcement directorate and Financial Fraud investigation Bureau or  even by most active bureau like C.B.I, economic fraud to the nation and the applicable method as one of the major threat to our economic as well as demographic development have been  making  successful  money without proper hindrances and became popular mode of money operation for dishonest community is a matter of deep observation. When we analyses the process and method of such transactions we found that our country face the loss of more amount what estimated in general budget annually.

Modus operands    

The emergence of informal transaction through all possible illegal terms and conditions including smuggling, fake currency and human trafficking have enabled in establishing  a parallel source of easy money as a challenge to F.D.I. responsive scenario, prevailing within our economic, political, social and  technological environment . Another damaging trend brought of entire operation is it did introduce an intercontinental network under organized consortium as threat to our investigative agencies.

Hawala racket has been proved a success full tools to lure and the people of all age group indiscriminating white or black profession. This process of transaction has been gaining popularity day after day and could oriented bad (criminals) and good (white collars) on the platform of common objective. Manipulation, alteration, corruption, inflation and volatilization are the principle source and the nefarious nexus are the assisting tools to run the business amounting more than value of our agricultural production. Combined efforts, skilled based functional techniques made them ahead than our investigating agencies, more competent operator even beyond unknown political boundary. LPG (Liberalization, Privatization, Globalization)   have given us the opportunity to become aware with world yet not known from any  four corners to another, this exposures have enlarged the sources and enriched the involved members with all possible information duly acknowledged as an ample scope, area or location of smooth operation.

Their modus operandi is an advantage to human kind. Disadvantageous factor is modern society becomes a follower of illegalities and we import unique combination of law breakers and law makers as neo rich to modern society. Frauds overpowered traditional value based population, fabrics knitted on ethical prices torn apart, morale begin to surrender before unaccountable wealth transactions and did manage to post a significant role in the entire operation, officially known as underworld transactions, gradually became popular and safest mode of transmission due to  nonpayment of further taxation.

Another reason what makes this process more favorite method amongst needy is; in a formal process through formal route if anybody want to get money as fast what availed in E.C.S. then the process could be availed to such need y as well provided;

1)       The credential of sender and receiver are not under scanner. Their identities must be free to all and recordable on each transaction.

2)       The purpose of amount and terms and condition of the said transaction has to be clarified as when demanded or required.

3)       The volume of amount is restricted and should not cross 30,000 dollar at a time for an individual.

4)       Institutional transactions must carry a corporate identification number (the source of entire gamut of financial health) above all the volume of transaction must be transacted as per guidelines framed under FERA & FEMA.

5)       Transactional commission, conversion charges, levies and taxes on service are variable and increasing day after day therefore every transaction has to follow them in order to receive and remit the payment as white as the process of formal route.

6)       The source of inflow as well as out flow must have to be disclosed whether the rules violated by either party in any manner than prosecution action duly be allowed and followed. 

This is hard to justify which one, formal or informal routes being adapted by even needy but latest transaction of 6,200 crores of amount through Delhi based bank of Baroda, by as many as 59 fake account holder under the veil of commercial transaction at a Hongkong based bank have proved neither formal nor the informal routes are favorable route to transact the volume of black money of India at any corner of the earth. E.C.S process have facilitated the illegal transaction in smarter mode than ever before, resulting loss of revenue more than the average income of our half of the population. To avoid payment emerged through each transaction , besides black money holders, ordinary people also hesitate and don’t prefer to adopt formal route, which is valid and one of the known source of revenue generation to the government concerned, transaction are held therein.

Where as greedy and under world community all along been in practice to evade the charges and taxes by hiding their source of fund. Since 1970, a common path of remittances are practiced through most active network popularly known as HAWALA, unfortunately, such illegalities gradually became a recognized procedural method of money transfer and begun to treat ignorable offence, when professionals, politicians and traders in large joined and support the process and so far been continued without looking at the poor economic health of own land and its people. The outcome is it had damaged our system as well as enabled to destabilize the financial position in international forum. A new empire of parallel economy had emerged and thousands of million amount having been transferred in abroad without evidential proof of knowledge to the local authority.

Recently our investigative agencies had to meet with another challenge, when thousands of crore unaccounted money unearthed from the so called lottery operators in Kolkata alone. Their operations were so organized and technically sound the fake game veiled as lottery, became part of life to those ,who earns less than 10,000 per month, approximately, 60% of the entire population are found involved directly besides known profession across the country. One thousand four lakhs amount already been transferred in the different account of Pakistan, U.A.E, Hongkong, Mauritius based financial institution from collection of such fake game through our nationalized and privately owned bank, which proves lacunas and loopholes in our banking system. In addition to detected amount, another dollops of thousands of crore seized on the spot. How did they do their money minting business? Answer is interesting; first, they are well communicated against abnormal rate of commission, which motivate them to accomplish their tasks uniform manner across the country.

Secondly, none of the subscriber of sold tickets are considered for prize money, prizes are chosen from unsold bundles, therefore at the end of the day operators become the owner of entire amount, looted from daily wager, vendors, petty salaried and small traders of the locality and the population below 10,000 per month income group.  What they do with hues amount? Being collected at the end of each day? A fund, Manifolds non planning budgetary expenditure, even of existing NAVARATNAS!!

The entire amount siphoned off to keep on terrorism and terrorist activities in our land, because government of neighboring country and U.A.E. are ready to cooperate them by providing a safe and secured shelter to conduct destruction against India but not agree to bear the expense from already weak sate fund, which prompted them to create a nefarious nexus and a trustable network in order to meet required expenditure for ongoing destructive activities in the present society. The allocation of fund in scarcity have put forwarded them with no choice of option, except how to generate hues amount of money as soon, that they could arrange and repeat their objectives above all appeared to become a biggest threat to peace loving law abiders community and a fresh constraint before a developing economy.

The way of collection are vivid in nature and broader in operation like;  Smuggling of bovines, human drugs, arms and ammunition and import of suicidal bombers , fake currency racket and on-line gambling , had played a significant role in reunification of their network more active than pre internet era. Worldwide connections, easy access, with remitting process and nexus between locals have kept them alive and their activities even without state fund.  Core Banking System (C.B.F.S.), Weak law, irrelevant regulations and corrupt authoritative attitude have provided ample opportunity to transit the fund from any private or public sector bank without being questioned identity or verifying their credibility.

We must congratulate our honest sincerer officials of Enforcement Directorate and Income tax department. They genuinely did conduct genuine raids and found 1265 Bank Accounts, duly run and owned by Hawala racketeers through out the country. This disclosure proves that if our investigating agencies are allowed to do their job, they could free our land from improvised threat of parallel economy.

Another interesting out come of the entire operation is, due to non disclosure of the source and identity of the receiver of the fund, racketeers did manage to create potholes in our financial transaction process and has been able to deviate the scale of fiscal growth under constant declining mode.

Further study suggests that following activities (i) Cow smuggling (ii) Drugs pedaling (iii) Arms and Ammunition supply (iv) Fake currency (v) On/off line lottery, Gambling are the major source, which sustain  under world community   and their illegalities alive and active across the nation.

In the wake and advent of latest technology, professionals other than under world’s occupation begun to  associate with  a new source of black money brought in to light, as mentioned below;

(i)Fake currency (ii) Loan amount (iii) Siphoning off public fund (iv) Loot of natural elements (v) Corporate plundering e.t.c.  Unfortunately, new resources are populous and favorable option of fast and easy money allocation amongst traders, politicians, technocrats, bureaucrats and more unfortunately being increased alarmingly.


If we multiply the transacted amount received in each dealing, then amount would touch another thousand crore and our present system of banking management have permitted to manage and shift them without sharing any portion of revenue as desired and deserved by government. At present our banking system allowed to transfer worth of 1 lakh dollar without any document, which has encouraged the inflow as well as out flow of black money and our financial institution including 19 commercial banks like oriental commerce, ING Vysa, Indus Ind and Yes bank have been taking active part to reestablish the empire of parallel economy. our banking system lacks electronic eye observation as need in each transaction postal department and branches in semi urban areas still continuing their operation with out electronic devices and facilities could detect the fake transactions. Today as per R.B.I. clarification more than 2.5 thousand crores of amount transferred illegally from a single place in Delhi. Further detection may reveal another source and actual amount what being claimed. Our collection of direct tax based on the contribution of only 3% proportion of entire population strength.

Illegalities in Domestic nature are rampant in India, there are more than 25,000 manufacturing units and more than that service sectors are on operation across the country, unfortunately out of them only 200—250 companies have been showing their interest to represent their annual turnover through proper balance sheet as a part of corporate responsibility.

Our system our infrastructure and our mode of operation are still miles away from any normal operation of developed nation. Physically we are rural, mentally corrupt, socially self centric, politically, unstable, culturally confused, economically bankrupt and morally degenerated in a manner as did not found in pre independence era.

Government must behave and act in a process of creation of wealth not drainage of our economy, because we are at developing stage and bound to import the items , like essential commodities from neighbor, self sufficiency reflects in paper not in action, therefore government should make PAN as mandatory document for every financial transaction. There are 3 cross citizen who are bracketed under direct taxation means less than 3% are the genuine tax payer of the volume of one hundred thirty crores population!! Which show how much we as an individual and in what extent our government as collective group is ready deliver good financial governance in order to compete those nations, who did attain liberty many years after august 1947?

Lack of digital footprints gave us harshad Mehta, ketan parikh brand financial scams; we did not take lesson now every year cheat funds appear before us and mutely compromised by derailing the legitimate amount and the revenues proportionate to entire transaction.

Government must take positive action to check and balance between the abnormal fees collected in terms of income by privately owned educational institutions, supreme court lawyers, famous medical practionners, chartered accountant and funds looted by N.G.O’s but never shown on paper neither served with proper receipt.

Gold merchants and merchandise of other jeweler items, realtors, and land, water, forest and mineral looters are another potential source of black money , prefer to operate domestically incontinence and at the instances of corrupt local authority. If we would not be able to arrest them either domestically or in abroad then the graph of socio-economic development would remain   an affair of exclusive growth, inequality among unity could never be erased, what promised and dreamed by the makers of modern India.

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