Amidst government efforts of crackdown on corruption and increase in transparency and boosting of foreign investment, many of the dubious companies have been de-registered and their cash deposits to the tune of usd 1 billion recovered.
It need be mentioned that government had already de-registered the business licenses of over 200,000 companies, and restricted their bank accounts, it is now working on limiting property transfers to trace any further generation of black money, said P.P. Chaudhary, junior minister for corporate affairs, in an interview last week in New Delhi.
The ministry is probing deposits of over $1 billion made by around 20,000 companies during the cash ban last year, while its Serious Fraud Investigation Office is investigating 1,505 companies for allegedly violating the Companies Act. It is examining another 809 listed companies, found untraceable by SEBI, to check their status, existence of their offices and directors, the minister said.
“Our purpose is to increase compliance so that investors’ confidence increases in Indian companies,” Mr Chaudhary said. “This will also attract foreign investors who would be sure that the companies they are investing in are genuine. We will have to curb shell companies if we want to increase confidence of investors in India.”
After winning the 2014 election in a landslide on the promise of tackling corruption and improving the ease of doing business, Prime Minister Narendra Modi has been taking measures to prevent money laundering, counterfeiting, hoarding and tax evasion. In November last year, he withdrew 86 percent of currency in circulation aiming to crackdown on unaccounted wealth and put an end to the country’s vast shadow economy. In an Independence Day speech on August 15, PM Modi claimed the move had unearthed over 300,000 shell companies.
Following his speech, the ministry of corporate affairs struck off the names of 217,239 companies for failing to comply with regulatory requirements and disqualified directors on these companies’ boards from assuming directorship at other firms.