Hoarders of unaccounted for money are taking the help of jewellers to turn their black money into gold, The Sunday Guardian has learnt after speaking to various stakeholders. The hoarders are exploiting this loophole as the government has not barred the limit on the sale and purchase of gold.

Minutes after Prime Minister Narendra Modi made the announcement to demonetise the Rs 500 and Rs 1,000 legal currency tenders across the country on Tuesday night, cash hoarders, with sackful of cash, started a mad rush to their nearby jewellers to buy as much gold as they could.

Several big and small jewellers across many cities including Delhi, Noida, Bhopal, Ranchi and Patna confirmed that they were being forced to function overtime to meet the sudden rise in the demand for jewellery that was coming from their long-standing clients.

Bank Street in Karol Bagh, which is one of the largest jewellery markets in the capital, witnessed a similar situation where people queued up outside jewellery shops with bags full of money pleading to shopkeepers all throughout Wednesday to give them as much gold as possible in lieu of their Rs 500 and Rs 1,000 notes.

One of the jewellers who owns a shop on Bank Street said, “Since the announcement, we have been getting a huge crowd. We had to pull down our shutters at regular intervals to manage the crowd. People have been demanding gold like never before, ranging from 1 kg to 15 kg. Many of our old customers who wanted to purchase jewellery had come to our residence to maintain anonymity,” he said.

The jewellers said that since they had received no official communication regarding limiting the sale and purchase of gold, they could not be blamed.

This sudden huge demand has also led to a meteoric rise in the price of gold, with jewellers selling gold at Rs 50,000 to Rs 60,000 for 10 gm, while legally the price of gold on Wednesday was Rs 32,192 for 10 gm (24 carats).

A jeweller from Bhopal said, “We have been getting frantic phone calls from all our known persons and customers to give them as much gold as we can, and we are also trying to comply with the demand as we have to keep our goodwill in the market. I have ordered 20 kg of gold from my business friends in Indore, who have sold this to me for Rs 40,000 for 10 gm. I will pass it on to the buyers for anything between Rs 50,000-Rs 60,000,” he said.

“We have never seen such a high demand earlier. Most of our jewellery was sold out by Wednesday night. People are coming to us pleading to sell them solid gold giving various reasons,” a Ranchi based jeweller said.

A Karol Bagh-based owner of a jewellery shop said that he was shocked when he got a call from a principal of a renowned school on Tuesday night. “This school principal, who is an old client, called me up to buy around 15 kg of gold as she had around Rs 8 crore cash with her. But we could not comply with her request as it would have cost us problems in our book of accounts.”

In most cases, the jewellers have been selling the gold by accepting the Rs 500 and Rs 1,000 notes without even asking for the PAN card details of the customers, thereby going against the orders of the Ministry of Finance, which mandated that any transaction above Rs 50,000 should compulsorily have the PAN details of the buyer.

“We are doing it by doing multiple transactions of less than Rs 50,000 as this does not attract the rules of attaching the PAN card details. Also, since no one is asking for any ‘pakka bill’, we are giving them backdated ‘kachha bill’. Even though the transaction is being done this week, the bill that we are preparing is of September or August. We will manage our accounts and fill the gaps through our own methods,” an official with a Noida-based jewellery showroom said.

Officials with the Income Tax Department and the Reserve Bank of India, when apprised of the methods being used by the black money hoarders, told The Sunday Guardian that the RBI is going to ask for the details of the people from the jewellers who have bought jewellery since Tuesday night.

However, the gold jewellers, who according to Income Tax officials have the largest amount of cash deposits with them, are least perturbed. “We have a huge number of bills that are back dated, but no transaction was ever done on these bills. We will use them to justify the cash that is going to accumulate with us. We have advised people to do maybe 30-40 transactions of less than Rs 50,000 from multiple shops in multiple cities to escape the IT Department,” a Patna-based jeweller said.