"The scheme is structured in such way that black money holders can conveniently convert their illegal funds stashed away in safe tax havens abroad. I don't rule out black money going out of the country to come back as white money in the form RIB bonds," said a senior banker who preferred anonymity.

"Non-resident Indians (NRIs) - who can buy the bonds - can give these bonds as gift to resident Indians. I need to have an arrangement with an NRI friend to get the bonds. I will send him money through the hawala route. My NRI friend will buy the bonds and gift it to me," said a leading exporter.

It is another advantage that the bonds don't attractany income tax, wealth tax and gift tax and black money conversion takes place without any tax payment.

In fact, many of the leading businessmen and exporters don't need to take the help of NRIs to subscribe to the issue as they have already become NRIs to take advantage of tax benefits. "It is an open secret that many of the tax havens like Cayman and Manns Islands are frequented by Indian businessmen," said a banker.

As deposits in Western countries carry low interest rates, the 7.75 per cent interest rate on RIBs is attractive by any standard and higher than the LIBOR (London Inter Bank Office Rate) rates. It is double advantage for black money holders: they can covert their illegal funds and get a higher interest rate as well.

Bankers fear laundering of black money in a big way. Money market sources don't rule out black money circulating within the country to go out through the hawala route for the purchase of the bonds. Once these bonds are purchased, the NRI can gift it to any Indian. However,this method is likely to be utilised by small-time traders and smugglers.

Black money holders are always looking for avenues to convert their illegal funds into white money. It may be recalled that the Voluntary Disclosure of Income Scheme (VDIS) of the previous government was a thumping success as it led to disclosure of income of over Rs 40,000 crore. Many of the leading companies had disclosed illegal funds running into hundreds of crores through the VDIS.

Taking a cue from VDIS, overseas corporate bodies (OCBs) floated by Indian companies will be in a position to buy RIBs and convert their funds stashed away in overseas banks. On top of this, the government will have to bear the exchange rate risk. This means the government and the SBI will have to pay for the fluctuation in the forex rate.

"It is surprising that the government is extending so many concessions to black money holders only to convert their funds into white. Had the government given some of these concessions to bona fide residentIndians, things would have been different. Even the generation of black money would have been limited," said a chartered accountant.