If they use the bank and have 50 k deposits , they still keep their BPL status and BPL subsidies . Think of this as the equivalent of the lowest notax bracket that does not pay income tax on lowest bracket of 2 . 5 L exempted income . Now if they have more deposits than 50 k per year , they go into the next subsidy bracket where they lose existing BPL subsidies because they are not technically BPL anymore . They don ' t want to do this because they might lose their BPL status , and want earnings in cash instead of back deposits to avoid this situation . This may not be black money , but the intent behind not using bank deposit is to keep milking the subsidy cow even when they would no more be technically eligible for BPL subsidies once deposits go above 50 k . Subsidychori like taxchori would be a better term than this for black subsidy hoarding .