India’S Biggest Dabba Trading Case Taken Up by Enforcement Directorate (Download PDF)

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The Enforcement Directorate has started investigations into the high profile Nagpur Dabba Trading case. The Nagpur’s “Dabba Trading” case was cracked in 2016. The enforcement case information report was registered by the Enforcement Directorate based on the First Information Report (FIR) filed by the by the Economic Offences Wing of Nagpur city’s police in 2016 to investigate illegal dabba trading activity.

Image shows of Parallel Market

Image Shows of Parallel Market

Image shows of Parallel Market

Research Analysis

  • The Dabba Traders have found to be betting on local stock prices, they are also carrying out transactions involving foreign securities such as SGX Nifty, Nasdaq or Dubai gold.

  • Hawala route is being used by the dabba traders to carry out the transactions.

  • The dabba trading is an informal trading being carried out by the traders betting on stock price movements through cash.

  • A trader invests without adequate collateral and the trades are typically cash settled. For example if a trader buys a stock of Rs. 500 and sells it for Rs. 550, he is entitled to get Rs. 10 after the position is squared off.

  • The gains so generated are not subjected to any taxes such as income tax, securities transaction and commodity transaction tax.

  • In India the estimated volume of dabba trading in India is pegged at about Rs. 3 lakh crore per day.

  • The cities like Nagpur, Mumbai, Kolkata, Ahmedabad, Indore and Jaipur are the hubs of dabba trading.

Enforcement Directorate

  • Enforcement Directorate is an economic intelligence agency responsible for countering economic crime in India formed in the year 1956.

  • It consists of f officers from the Indian Revenue Service, Indian Corporate Law Service, Indian Police Service and the Indian Administrative Service.

  • The enforcement of two key Acts of the Government of India namely, the Foreign Exchange Management Act 1999 (FEMA) and the Prevention of Money Laundering Act 2002 (PMLA) are the primary objectives of the Enforcement Directorate.

  • The headquarter of the Directorate of Enforcement is situated at New Delhi along with the five regional offices Mumbai, Chennai, Chandigarh, Kolkata and Delhi being headed by Special Directors of Enforcement.

- Published/Last Modified on: September 27, 2019

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