Underground couriers rush to turn cash into gold

India’s massive underground network of financial couriers, who are estimated to conduct over Rs. 1,000 crore a day in undocumented cash transactions for wholesale businesses across the country, could be hit hard by the Reserve Bank of India’s decision to phase out currency notes issued before 2005, police and trade insider sources told The Hindu .

Delhi-based Angaria cash-couriers said they were scrambling to turn parts of cash holdings into gold or diamonds, or reaching out to shadowy companies willing to exchange, for a commission, unaccounted money for cheques.

Individuals who are not bank customers will have to furnish identity and residence documentation to exchange more than ten old Rs. 500 and Rs. 1,000 notes from July 1, the RBI said on Wednesday.

“This is a reach challenge for us and our customers,” an Angaria-based in the capital’s Chandni Chowk area said. “It means weeding out lakhs of old banknotes, and somehow replacing them with new banknotes before the RBI deadline.”

“We’ve done it before and we’ll do it again”, he added, “but it’s going to be tough.”

The cash underground

Angarias — the Gujarati word for courier, used synonymously with others such as challaniya in Hindi — typically charge a 0.5 per cent commission in return for near-instant, tax-free financial transfers. “The customer might, say, want to pay Rs. 10 lakh to his supplier in Ahmedabad,” he said. “He’ll give me the cash, plus a commission. I’ll give him a password for his customer, and send a text message to my counterpart in Ahmedabad, who will complete the transaction.”

Largely hole-in-the wall operations, but heir to a centuries-old tradition, the Angaria trade is centred around the diamond trade in Mumbai, which in turn is built around customers who pay cash. In Delhi, however, grain traders, cloth merchants and a welter of other wholesale businesses also revolve around transactions routed through Angarias.

There are no reliable figures for the scale of the Angaria business, but Income Tax raids on the Delhi branch of Angaria firm Kantilal — just one of its 25 offices — led to the finding that it had handled Rs. 2.4 crore in cash over a 33-day period.

Police sources said Angarias reconcile their accounts by shipping gold or diamonds using trusted couriers who travel by train, concealing the valuables in their person. “It might seem a dangerous business,” one Delhi Police official said, “but it revolves around kinship ties and generations-old business relationships. There’s almost no fraud or violence.”

The Angaria business is deeply embedded in India’s business fabric. Though the business has grown significantly since the 1970s, along with India’s black-money economy, historians record that similar operations date back centuries.

Historian C.A. Bayly, among others, has recorded the existence of well-developed Indian mercantile networks stretching across the South Asian region in the pre-colonial era. Mike Dash, who has written on Thugee gangs, has recorded that businessmen involved in the opium trade used couriers to ferry cash from Mumbai to Central India.

In July 2013, the National Investigation Agency seized four trucks carrying 102 bags of cash and jewellery after an informant led its officers to believe the shipment was connected to terrorism. NIA investigators, however, soon discovered the shipment was under police escort, part of a protection facility extended to Angarias for years.

Income Tax authorities later returned the cash and jewellery to the Angarias after they produced receipts to prove possession.

Amrutbhai Patel, president of Mumbai’s Angaria Association, said the business was completely legal as “the receipt of each transaction is issued to the parties.” “We are only couriers,” he said.

When The Hindu ’s reporter visited the Angaria dealers in Delhi, he was told receipts were only given for a small percentage of transactions.

In 2005, an Income-Tax Tribunal upheld this view, saying since Angarias work “as a courier/transport agent, very much akin to postal services, whatever cash, valuables it receives during the course of its business, remains in its possession as courier/Bailey and it does not become the owner.”

( With inputs from Shubhomoy Sikdar )