Another area that the banks need to guard against is misuse of accounts for money muling. In a recent episode, it was observed that an idle account was used for receiving and transferring large fund without the knowledge of the account holder. The fact came to light only when the income tax authorities served a notice on the account holder.
This episode highlights the failure of bank’s systems and processes for monitoring of accounts. The newly opened accounts under the PMJDY could be very vulnerable to such sharp practices and hence, banks need to clearly guard against them. Kite flyers and the Ponzi scheme operators also sometimes use mule accounts to swindle public money.