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Safekeeping business hit hard after multiple I-T raids on private lockers

Most of the private vault operators lack proper KYC documentation which creates embarrassments for them in case of an I-T raid

Safekeeping business hit hard after multiple I-T raids on private lockers

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New Delhi: A series of income-tax raids on private lockers and safety vaults across Delhi and Kolkata after demonetisation have led to shutting down of the business of safekeeping. According to a report in the Economic Times, many smaller ones have shut their business while bigger players have intensified the know-your-customer process.

“The recent I-T raids have taken away whatever little business we had,” the proprietor of a Mumbai-based vault firm which plans to wind up over the next six months, told ET. “Private locker business collapsed immediately after demonetisation… There’re not many businessmen holding cash anymore. I-T raids have only added to our list of problems,” he added.

According to the business daily, earlier this year, the I-T department raided a vault space (with over 600 lockers) in Vardaan Market, Kolkata, and seized cash and jewellery worth over crores of rupees. Similarly, a raid at vaults in Delhi’s Chandni Chowk six months ago, uncovered unaccounted cash worth Rs 25 crore. Both of these vaults lacked proper KYC documentation, making it difficult for taxmen to identify the lessees.

According to the report, most of the private vault operators lack proper KYC documentation which creates embarrassments for them.

“There are a few vaults in Mumbai too, that do not keep proper KYC records of their clients,” said Piyush K Dak, director, Navkettan Lockers, which provides locker facilities in multiple states including Maharashtra, Telangana and Gujarat.

“I am not concerned about the content kept inside our lockers as long as it is legal. But I should be able to reach the customer when the agencies come knocking. That apart, if we’re suspicious about the stored content in our lockers, we’ll approach the police to get it checked,” Dak further told ET.

Till note ban in November 2016, private safekeeping was a thriving business, said, vault operators. Mostly, small businessmen and jewellery shop owners use this service to store cash and jewellery. But this trend came off sharply after demonetisation, vault operators told the publication.

Vault operators believe KYC rules for the industry need to be tightened. “There are lot of unorganised players in this industry; some of them do not keep records of their clients. These firms give the whole industry a bad name,” the ET report quoted VK Gupta of Delhi Safe Deposit Company, one of the oldest private vault providers in the country as saying.

Some large vault service providers like Navkettan and Delhi Safe Deposit Company are taking in more corporates as clients. This, in a way, insures these players from “embarrassments” such as raids or police seizures, the business daily said.

“Corporates use lockers to keep documents or memory drives… They’re quite KYC-compliant as well. We’re getting a lot of corporate clients these days,” Gupta said.

[“source=timesnownews”]

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