The Bengaluru police have seized Rs 47 lakh in new Rs 2,000 currency notes from a textile merchant in the city on Wednesday night, the Times of India reported.
Police suspect that he was charging a commission to help convert black money to white, the report stated.
The Kalasipalya traffic police started following a man who was walking around with a bag of cash after receiving a tip-off, TOI reported.
According to the report, the man was talking over the phone when the traffic police picked him up and found Rs 5 lakh of new currency notes in the bag.
He identified himself as Pintu and claimed he worked for a textile merchant. The police then took him to his employer, Gulab Singh, owner of six clothing stores, to verify his claim, the TOI report said.
The cops then began searching Gulab Singhâ€™s house and recovered Rs 42 lakh new currency notes and also Rs 2.5 lakh in the demonetized currency notes, police told TOI.
Singh initially claimed that the money was meant for his employeesâ€™ salaries. However, he was unable to furnish documents to corroborate his claim, a senior police official told TOI.
Singh also could not furnish proof for obtaining such a large sum of money considering the cap on withdrawal, the TOI report said.
Police said that up on investigation, they discovered that Singh was running a business of converting black money into white, while charging 30% commission to convert Rs 1 lakh.
The police told TOI that they are also looking to see if Singh was involved with any bank employees to source the new currency notes from. The cops have arrested Singh, Pintu and another associate in connection with this case, the report said.
On Tuesday, the Delhi police had apprehended two men carrying Rs 27 lakh in new currency denominations after exchanging the demonetized ones with agents in Mumbai. The crime branch suspects that the duo had earlier converted Rs 1.5 crore worth demonetized notes, The Indian Express had reported.
On Friday, the police arrested two men with Rs 6 lakh of new currency notes, The Indian Express had reported.
In both instances the money was being exchanged for a commission, the reports stated.