ED arrests ex-chairman of Seva Vikas Co-operative Bank

The former chairman of Seva Vikas Co-operative Bank, Amar Mulchandani, has been arrested by the Enforcement Directorate in connection with a money-laundering probe. Mulchandani is accused of taking a commission of 20% from sanctioned loans, resulting in a loss of ?429 crore ($60 million) to the bank. The investigation revealed that loans were given to favoured borrowers without proper verification of their creditworthiness or collateral securities. More than 92% of loan accounts turned non-performing, causing the collapse of the bank and losses to small depositors.

MUMBAI: The Enforcement Directorate (ED) has arrested the former chairman of Pune-based Seva Vikas Co-operative Bank as part of its money-laundering probe related to alleged irregularities and causing a loss of ₹429 crore to the bank, the agency said on Wednesday.

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According to the ED, Amar Mulchandani, the ex-chairman of the bank, had allegedly taken a commission of 20% from the sanctioned loans. Mulchandani was produced before a special PMLA (Prevention of Money Laundering Act) court and remanded in ED custody till Friday.

The ED probe revealed that at the behest of the accused, loans were given to favoured borrowers, in contravention of banking norms, with no verification of their creditworthiness and without collateral securities, according to an ED source.

“The bank suffered a loss of ₹429 crore after 124 of its loan accounts turned Non-Performing Assets (NPA) after defaulting on payments,” the ED source said. “More than 92% of the loan accounts had turned NPA, which ultimately led to the collapse of the bank, causing loss to thousands of small depositors,” the source added.

The ED had initiated an investigation on the basis of multiple FIRs in Pune against Mulchandani along with the bank’s other directors, officials and loan defaulters.

The investigation revealed that the bank was being run allegedly like a ‘family proprietorship’ by Mulchandani and he had treated public deposits in the bank like his ‘personal fiefdom’, the source added.

“The accused had violated all prudent banking norms to illegally sanction loans to his favoured borrowers in an arbitrary manner, without checking their creditworthiness, without adequate collateral securities and after taking bribes at the rate of 20% of the sanctioned loan amounts,” the source said.

The accused had allegedly made his family members as the bank’s directors with the clear motive to have a brute majority in the Board of Directors to sanction loans as per his whims and fancies, the ED source said.

The joint registrar (audit) had earlier done an audit of the bank and found the irregularities after which the Reserve Bank of India had cancelled the licence of the bank in last October.

The agency had in January carried out searches at 10 premises – linked to three beneficiaries in Pimpri-Chinchwad and Pune – that had led to the seizure of incriminating documents and valuables/cash worth over ₹3 crore. The ED has so far provisionally attached properties worth ₹122.35 crore in the case, including various assets suspected of linkage with Mulchandani.