Lok Sabha Question No. 207 (UNSTARRED), answered on 2018-02-02
Subject: Black Money in Share Market
Ministry: FINANCE
Asked by: NEELAM SONKER, RAVINDRA VISHWANATH GAIKWAD

Govemment  of India Ministry of Finance

## Department of Economic  Affairs

## LOK SABHA

## UNSTARRED  QUESTION  NO. 207

## TO BE ANSWER"ED ON FRIDAY, FEBRUARY  02,2018/MAGHA  13, 1939 (SAKA)

## BLACK MONEY IN SHARE MARKET

## OUESTION

## 207. SHRIMATI NEELAM SONKER :

## PROF. RAVINDRA  VISHWANATH  GAIKWAD  :

Will the Minister  of FINANCE be pleased to state:

(a) whether the Govemment has issued any norms  or guidelines  to prevent  the investment/use of black money in the share  markets and if so, the details thereof;

(b) the details of total amount  of money  invested in the share markets  and the number of cases ofblack money unearthed ia this regard  during  the last three years; and

(c) the total number of cases found usage of black money in the share markets on which action has been taken?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PON RADHAKRISHNAN)

(a): Intermediaries  registered  with Securities  and Exchange Board of India (SEBI), the securities  market regulator,  are required to follow  stringent Know Your Client (KYC) norms on an on-going basis and are also required  to file Suspicious  Transaction Reports  (STRs)  to the Financial Intelligence  Unit (FIU)  in case of suspicious  activities of the clients.  These STRs are analysed by FIU by linking  other information  available with FIU, and the analysed STRs are then disseminated  to various Law Enforcement Agencies (LEAs) for further action. This intelligence  input  from FIU helps LEAs in investigating and detecting  probable  cases of black money.

In order to strengthen  the KYC norms and identiff  every participant  in the securities market, thereby ensuring sound audit trail, SEBI, vide circular dated April 27,2007,  mandated that PAN would be the sole identification number  for all participants ffansacting in the securities market, irrespective  of the amount of fiansaction.  Further, the financing  operations  in the stock markets are through banking channels and cash transactions  are permitted  only in exceptional circumstances,  to the extent not in vioiation of the requirements  of tax authorities  as may be in force from time to time. The nature of the ftrnds flowing  into the stock markets would  be reflected  in the accounts opened  with the banks together  with the customer due diligence (CDD) norms applicable to. such accounts. Banks and other financial intermediaries have to ensure compliance with the enhanced CDD norms, as required  under Prevention of Money Laundering  Act and Rules notified thereunder.

(b)  &  (c):  As regards the total amount  of money  invested in the share markets,  SEBI has informed  that the annual  tumover of equity segment  of Bombay Stock Exchange (BSE) & National  Stock Exchange (NSE)  stood at Rs. 51,84,500  Cr., P.s. 49,77,072  Cr., Rs. 60,54,174 Cr. and Rs. 67,48,284  Cr. respectively in the FY 2014-15,2015-16,2016-17  and 2017-18 (up till January  24, 2018). In terms of market  capitalization,  the amount invested in listed companies  was at Rs. 1,01,49,290  Cr., Rs. 94,75,328 Cr., Rs. 1,21,54,525  Cr. and Rs. 1,56,21,536  Cr. respectively  as at the end ofFY 2014-15,2015-16,2016-17  and 2017-18 (up til I January 24,2018\.

As regards  the number of cases of black money  unearthed and action  taken  on it, SEBI has submitted that it looks only into the violations  relating to the securities  laws,  and in case of any alert of tax evasions/black money, the same is refemed to Income  Tax Department (ITD) for necessary action at their end. Central Board of Direct Taxes (CBDT)  has informed  that it does not centrally  maintain  sector-wise details of search and seizure  actions conducted  by Income Tax Department (ITD). However, ITD takes appropriate action in suitable cases, including those involving usage of black money in share markets.  Such actions include searches, survey, assessment of income,  lely oftax,  penalty and filing of prosecution complaints before criminal courts,  whichever is applicable as per direct tax laws.