As many as 2.25 lakh shell companies have been struck off by the government in the past three months and action will be taken against more such companies over next few months, Minister of State for Corporate Affairs PP Chaudhary told The Statesman in an exclusive interview on Thursday. In a separate crackdown against erring directors, about 3.10 lakh directors have been disqualified for non-filing of the annual returns by the companies.

The accounts of the disqualified companies have been frozen and the companies have been barred from transferring any property or carry out any financial transactions. The action was taken on basis of the data received from the banks. Shell companies are the ones that are created for the purpose of diverting money and do not carry out actual business. Most of these companies were created after demonetisation on 8 November, 2016, that saw the government invalidating all the high value currency notes from the economy.

“These companies have been used by unscrupulous people who misuse the corporate structure. These may have been used for money laundering, drugs and terror funding,” the minister said.

On the basis of preliminary investigations launched against 2.91 lakh companies, close to 2.25 lakh companies have been struck off until now. Investigations found about 63,000 companies deposited and withdrew over Rs 21,000 crore after demonetisation. In a particular incident, an account deposited Rs 3,700 crore and withdrew post note ban. Another company deposited Rs 2,384 crore and withdrew it subsequently. Many such cases have been sent to the Serious Fraud Investigation Office (SFIO) for further investigations.

More investigations are likely to be ordered over next few months against the companies where deposits would be found to be suspicious. A few banks including State Bank of India and Punjab National Bank are yet to submit information, sources said. Rural and cooperative banks will soon be asked to share information of the money deposited after the note ban.

As far as directors are concerned, around 3.10 lakh have been disqualified for non-filing of annual returns by the company for continuous three financial years. Directors, found to have violated section 164 of the Companies Act, have also been disqualified from working in any other company for five years. Interestingly, only 100 directors have approached High Court against their disqualification. The ministry may take action against more such directors. Some cases have been sent to the SFIO for further investigations.