When India’s Prime Minister Narendra Modi banned high-denomination currency bills in a surprise move late last year, authorities noticed a surge in shell companies depositing cash in banks, seemingly in a bid to hide who owned that wealth.

The moment, said a top aide to Modi, was an eye-opener for the government, which had not realised just how much shell companies were being used to hide assets and launder money.

Modi’s office has formed a team of top law enforcement and revenue officials to go after such companies, according to the aide and a government memo reviewed by Reuters.

Last month, the authorities ordered nearly 200,000 shell companies to be shut down and the aide said the government is examining hundreds of thousands more.

Perhaps one of the most tangible outcomes of demonetisation

The systematic crackdown on shell companies – which have no active business operations or assets – is perhaps one of the most tangible outcomes of demonetisation, which aimed to hit tax evasion and move India towards cashless, digital transactions that leave a paper trail.

“We are very much at war against black money. The impact of this will be huge on shell companies,” the aide, who cannot be named in line with government rules, said.

In his Independence Day address on Tuesday, Modi claimed credit for going after these companies, and warned that “looters of the nation’s wealth will have to answer”.

Modi took office in 2014, vowing to fight corruption and bring back billions of dollars stashed away overseas as well as in real estate, stock markets and front companies through a web of fictitious names.

While the move to withdraw 85 per cent of bank notes shook the economy and was widely criticised, the fight against unaccounted wealth carries overwhelming support from ordinary Indians who often have to pay bribes for government services.