₹494cr bank fraud case: 97% of loans given were irregular, turned NPA, says ED

The ED's probe into the ₹494-crore Shivajirao Bhosale Sahakari Bank fraud revealed key managers misused loans for personal gain, causing ₹393 crore in losses.

Mumbai: The Enforcement Directorate’s (ED) money-laundering probe in connection with the ₹494-crore fraud Shivajirao Bhosale Sahakari Bank in Pune, has revealed that the key managerial accused persons of the bank allegedly utilised disbursed loan amounts for their own benefit by giving approvals to irregular loan cases, thereby resulting in 97% of such loan cases turning into Non-Performing Assets (NPA), causing loss of around ₹393 crore to the bank.

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The ED alleged that the accused person embezzled the depositors’ money with common intent and unlawfully breached the trust of the depositors to commit the fraud. “The Key Managerial Persons of the Bank treated the bank and its funds as their family concern and utilised the siphoned funds for their personal gains,” an ED source said.

The ED initiated its investigation based on a first information report (FIR) registered by Pune’s Shivajinagar police station on January 8, 2020. The FIR was based on a complaint filed by the statutory auditor of Shivajirao Bhosale Sahakari Bank Limited.

“The ED probe revealed that bogus cheque-discounting facilities were carried out to reduce the bank’s non-performing assets,” said an ED official. “Key managerial persons of the bank treated the bank and its funds as their family concern and utilised the siphoned funds for their personal gains.”

In March 2021, the ED arrested four accused persons, A Bhosale, S Jadhav, T Padwal and R Bhosale, who are currently in judicial custody. The ED subsequently submitted its chargesheet against the accused persons in April 2021 after collecting alleged evidence against the accused and their role in money laundering activities related to the case.

During searches conducted in February last year, the ED had provisionally attached 23 properties worth ₹26.60 crore belonging to persons under the scanner in the case, which the Adjudicating Authority subsequently confirmed via an order on July 19, 2023.

The agency on Tuesday arrested the former chairman of Pune Zilla parishad, Mangaldas Bandal, for his alleged role in the case after which a Mumbai special court remanded him to ED’s custody till August 29. The ED alleged that he had availed loans in the name of associated concerns of local businessmen and farmers from the bank, using his close association with a then-top authority of the Shivajirao Bhosale Sahakari Bank Limited, and the proceeds from such loans were later used for his personal gain.

According to ED, to obtain loans, the accused allegedly used lands belonging to local farmers and villagers as mortgage properties, whose value was inflated. ED’s money trail conducted in the case, so far, allegedly revealed that Bandal received proceeds of crime worth around ₹41 crore, the agency told the court while seeking his remand. Bandal’s lawyers denied all of ED’s allegations against their client as unfounded.