One senior I-T officer, whose sleuths on 12 December “seized” Rs 1.54 crore in new currency notes of Rs 2,000 and Rs 500, said that the serial numbers on the notes proved that they were not in “long series” and were therefore not procured by illegal means. He said he was still busy preparing the inventory “which has already run into close to 230 pages”.

“This whole exercise is illegal and therefore deeply frustrating,” another senior IT official in Delhi said, adding that “there is regulation on the volume of foreign exchange an individual can hold, but there is nothing in the law or statute books that forbids people from holding cash as long as they are able to prove satisfactorily the source(s) of such money.”

On 13 December, Enforcement Directorate (ED) officials swooped down on a Chandigarh cloth merchant’s residence and seized Rs 2.15 crore in cash as part of their putative effort to check the hawala trade more than a month after Prime Minister Narendra Modi’s demonetisation move kicked in.

The ED employed provisions of the Foreign Exchange Management Act (FEMA) against the Chandigarh cloth merchant. The ED also claimed to have “unearthed a racket” involving alleged illegal conversion of the demonetised Rs 1,000 and Rs 500 notes, arresting seven people in Bengaluru and seizing Rs 93 lakh in new Rs 2,000 and Rs 500 notes. The allegation was that the money was going to be laundered.