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Misappropriation of public funds caused loss of ₹429 crore: ED to spl court
The Enforcement Directorate (ED) chargesheet revealed that the fraud at Pune's Seva Vikas Cooperative Bank caused a loss of around ₹429 crore to the bank. Former chairman Amar Mulchandani and three other beneficiaries were among the dozen accused mentioned in the chargesheet. The investigation found that the bank had been run without following financial norms, with loans allegedly sanctioned without proper security or creditworthiness checks in exchange for kickbacks. The bank's license was cancelled by the RBI in October 2022.
Kicker: Bank fraud
Mumbai: An Enforcement Directorate (ED) money laundering probe into the fraud at Pune’s Seva Vikas Cooperative Bank revealed that alleged misappropriation of public funds had caused a loss of around ₹429 crore to the bank, according to the agency’s chargesheet submitted in a Mumbai special court on Friday.
The chargesheet mentioned the role of a dozen accused persons/entities, including the bank’s former chairman Amar Mulchandani and three other beneficiaries. ED arrested Mulchandani on July 1 for his alleged role in the case. More than 92% of the loan accounts at the bank had allegedly turned into Non-Performing Assets (NPA), sources said.
ED’s investigation revealed that the bank had allegedly been run like a family proprietorship without following any prudent financial norms. The probe had revealed that loans had been allegedly sanctioned without any viable security and without ascertaining the creditworthiness of loan applicants in return for kickbacks, sources said. It was alleged that bribes at the rate of 20% commission of the sanctioned loan amounts had been paid.
ED had initiated its investigation based on multiple cases registered by the Pune Police based on the complaints of the bank and an audit conducted by the Registrar of Cooperative Societies, which pointed to alleged fraud and misappropriation of public funds.
It was revealed in the probe that several loans were sanctioned allegedly without ascertaining the repayment capacity of the borrowers. A loan worth crore of rupees was sanctioned allegedly to a borrower having an annual income of ₹4-5 lakh merely for purchasing high-end cars, sources said.
“No proper verification of utilisation of loan funds was done in the bank, particularly for loans for the purchase of high-end cars and yet no such cars were purchased,” a source said, adding, it was alleged that an accused had received favours for his political advancement.
Last October, the Reserve Bank of India (RBI) cancelled the bank’s licence because the lender did not have adequate capital and earning prospects. The bank had ceased to operate with effect from the close of business hours on Oct 10, 2022, the RBI said in a statement.
