ED arrests ex-Chairman of Seva Vikas Co-op Bank in ₹429 crore fraud case

The arrest has been made in connection with an ongoing investigation into a case of fraud wherein the Seva Vikas Cooperative Bank has suffered losses of ₹429 crore in 124 non-performing asset (NPA) loan accounts

The Enforcement Directorate (ED) has arrested Amar Sadhuram Mulchandani, ex-chairman, Seva Vikas Cooperative Bank, under provisions of the Prevention of Money Laundering Act (PMLA) 2002 in a fraud case of ₹429 crore, the agency said on Wednesday.

The ED said that the fraud had led to the bank going bankrupt with thousands of small depositors incurring losses. (REPRESENTATIVE PIC)

The arrest has been made in connection with an ongoing investigation into a case of fraud wherein the Seva Vikas Cooperative Bank has suffered losses of ₹429 crore in 124 non-performing asset (NPA) loan accounts. Mulchandani was produced before a court in Mumbai which remanded him to six days of ED custody till July 7.

The ED said that the fraud had led to the bank going bankrupt with thousands of small depositors incurring losses. The ED initiated the investigation on the basis of multiple FIRs registered in Pune against Mulchandani and other bank directors and officials and loan defaulters. The investigation revealed that the bank was being run like a family proprietorship by Mulchandani who treated public deposits like his personal fiefdom and violated all banking norms to illegally sanction loans to those whom he favoured in an arbitrary manner, without checking their creditworthiness and without adequate collateral securities and after taking bribes at the rate of 20% of the sanctioned loan amounts.

“He made his family members as Directors in the bank with a clear motive to have brute majority in Board of Directors to sanction loans as per his whims and fancies. More than 92 per cent of the loan accounts had turned NPA which ultimately led to the collapse of the bank,” ED said.

The Reserve Bank of India cancelled the licence of the bank. Earlier, properties worth ₹122.35 crore were provisionally attached in this case, including various benami assets belonging to Mulchandani. Further investigation in the case is underway.