Panama papers: Rajan says probe to determine legitimacy of accounts

Asserting that there could be genuine reasons for having offshore accounts, Reserve Bank of India (RBI) Governor Raghuram Rajan on Tuesday said that the multi-agency probe will look into the legitimacy of such holdings of Indians named in the leaked Panama list.

The RBI is part of the multi-agency group announced by the government on Monday to probe the list which has nearly 500 Indians, including celebrities and industrialists.

"We are obviously part of the investigative team that is going to look into this matter. It is important to note that there are legitimate reasons to have accounts outside," he said after unveiling the first bi-monthly policy for 2016-17.

"The LRS (Liberalised Remittance Scheme) scheme allows you to take money outside. Yet to see what is legitimate and what is not legitimate. That's the process of investigation that will take place," he said.

Under the LRS, all resident individuals, including minors, are allowed to freely remit up to $2,50,000 per financial year for any permissible current or capital account transaction or a combination of both.

Finance Minister Arun Jaitley said on Monday that Prime Minister Narendra Modi discussed the issue with him in the morning and on his advise the group has been set up, which includes officials from Central Board of Direct Taxes, RBI and Financial Intelligence Unit.

The Indian Express carried a report based on leaked documents of a Panama law firm Mossack Fonseca which is said to feature links of over 500 Indians to offshore firms.

The newspaper claimed that the list included foundations and trusts and passport details of 234 Indians.

Speaking on the issue, RBI Deputy Governor H R Khan said there are 2-3 issues involved in the issue.

"Under FEMA (Foreign Exchange Management Act) few things are permitted and few are not. So the investigation will reveal what is legitimate," Khan added.

The special investigation team (SIT) on black money said on Monday that it will investigate the Panama Papers issue thoroughly.

"Investigations are being carried out. We are going to investigate it (the list) thoroughly," SIT Chairman Justice (retd) M B Shah had said.