Lok Sabha Question No. 824 (UNSTARRED), answered on 2018-12-14
Subject: Economic Offences
Ministry: FINANCE
Asked by: CHANDRA PRAKASH JOSHI, SANTOSH AHLAWAT, SUMEDHANAND SARASWATI, RAJESH KUMAR DIWAKAR

Government of India Ministry of Finance Department of Revenue

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## LOK SABHA UNSTARRED QUESTION NO. 824

TO BE ANSWERED ON FRIDAY, DECEMBER 14, 2018 AGRAHAYANA 23, 1940 (SAKA)

## ECONOMIC OFFENCES

824 : SHRI CHANDRA PRAKASH JOSHI: SHRIMATI SANTOSH AHLAWAT: SHRI SUMEDHANAND SARSWATI: SHRI RAJESH KUMAR DIWAKER:

Will the Minister of FINANCE be pleased to state :

- (a) whether  the  Government  has  issued  any  guidelines  to  the  investigating  agencies  in  the country to share the information regarding the cases of economic offence with banks to keep a check on such offences;
- (b) if so, the details thereof;
- (c) whether  the  Government  is  proposing  to  blacklist  an  individual  or  group  against  whom allegation of economic offence has been levelled and investigation is under process;
- (d) if so, the details thereof; and
- (e) if not, the reasons therefor?

## ANSWER MINISTER OF STATE IN THE MINSTRY OF FINANCE (SHRI SHIV PRATAP SHUKLA)

(a) and (b) : As per 'Framework for timely detection, reporting, investigation etc. relating to large value bank frauds' by Department of Financial Services, Ministry of Finance, Public Sector Banks (PSBs) have been instructed to seek report from the Central Economic Intelligence Bureau (CEIB) on any prospective borrower at (i) pre-sanction stage, (ii) renewal of existing loan and (iii) NPA account for an amount of Rs 50 crore and above.

On  PSB's  request,  reports  are  provided  by  the  CEIB  on  credentials  of  entities  as  referred  by banks. In the reports, economic offence details as reported by the law enforcement agencies to the  CEIB  with  respect  to  such  entities  are  incorporated.  Details  like  Non-Performing  Assets account  with  other  banks  /  connected  entities  and  loan  taken  from  other  banks  /  financial institutions are also incorporated in the reports.  During the current financial year, so far 1605 such reports have been provided to banks wherein economic offence details, if any, were incorporated.

CEIB  has  requested  Central  Board  of  Indirect  Taxes  and  Customs  (CBIC)  to  instruct  its  field formations to make references to concerned Banks/Financial Institutions in case of irregularities of high magnitude are detected by them.

CEIB has also requested Central Board of  Direct  Taxes  (CBDT)  to  issue  guidelines to  its  field formations  and  investigation  /  Intelligence  &  Criminal  Intelligence  Directorates  to  share  the information in respect of cases including financial irregularities involving bank frauds to CEIB so that the regulatory authorities and banks may carry out the task of identification of fraud as well as recovery of siphoned off funds more efficiently. CBDT shares the relevant information of economic offences with various agencies as per the provisions of Section 138 of the Income Tax and extant guidelines are issued from time to time.

With a view to  streamline  and  strengthen  the information  sharing  mechanism,  a  new  Standard Operating Procedure (SOP) on sharing of information between various law enforcement agencies has  been  agreed  to  under  the  aegis  'Task  Force  on  Shell  Companies  under  the  Joint Chairmanship of Revenue Secretary and Secretary, Ministry of Corporate Affairs, constituted in February, 2017.

Mechanism for  sharing  of  information  between  various  law  enforcement  agencies  is  already  in place under the Regional Economic Intelligence Council (REIC) and Central Economic Intelligence Bureau. Registrar of Companies of the region are the participants in the REIC meeting under the Ministry of Finance and information regarding companies data base and actions taken regarding violation of companies Act, are shared with members of REIC. Similarly, information are shared  in  State  Level  Coordination  Committee  meeting  convened  by  RBI.  Information  is  also shared  with  Securities  and  Exchange  Board  of  India  (SEBI)  for  listed  companies  similarly  with concerned regulators whenever required.

Further,  Ministry  of  Corporate  Affairs  administers  the  Companies  Act  and  Limited  Liability Partnership Act. Based on complaints of Suo-moto inquiry is conducted under the provisions of the  Companies  Act,  and  if  required,  inspection  and  investigation  are  also  ordered  against companies.  Based  on  the  findings,  prosecutions  are  filed  under  various  provisions  of  the Companies Act. In case of financial irregularities matter is referred to Economic Offence Wing.

(c),  (d)  and  (e)  :  There  is  no  proposal  under  consideration  in  the  Department  of  Revenue  to blacklist an  individual  or  group  against  whom  allegation  of  economic offence  has  been  levelled and investigation is under process.