How did Bihar’s Srijan scam unfold? As CM Nitish Kumar faces heat, here’s a blow-by-blow account

Updated on Aug 27, 2017 01:39 PM IST

As the heat turns on Bihar CM Nitish Kumar over the Srijan scam, here is a blow-by-blow account of how a registered society, aided by powerful people, embezzled government money to the tune of thousand crore.

The office of the Srijan Mahila Vikas Sahyog Samiti Limited in Sabour, Bhagalpur.(Arun Kumar/HT Photo.)
The office of the Srijan Mahila Vikas Sahyog Samiti Limited in Sabour, Bhagalpur.(Arun Kumar/HT Photo.)
Hindustan Times | By

Her story begins like any other ordinary woman’s, burdened with the responsibility of five children after the sudden death of her husband in 1991. But life took a far from ordinary turn for Manorama Devi. In the next 20 years, she established a formidable network of powerful friends and played with crores of government funds, illegally diverted into the account of her NGO, Srijan Mahila Vikas Sahyog Samiti (henceforth Srijan).

Sixty-five-year-old Manorama Devi died in February this year, but her name is at the epicentre of an almost Rs 1,000 crore scam in Bihar.

Read more: Srijan scam in 10 points

RJD chief Lalu Prasad has been attacking the Nitish Kumar government as the NDA was in power for a major part of the scam period (2004-13). Deputy CM Sushil Kumar Modi was the finance minister of Bihar from 2005 to 2013. Lalu has also been relentlessly tweeting photographs of Manorama Devi at various functions with NDA leaders including BJP minister Giriraj Singh, Shahnawaz Hussain, Sushil Kumar Modi and chief minister Nitish Kumar. The RJD wants the resignation of both Nitish Kumar and Sushil Kumar Modi and a CBI probe monitored by the Supreme Court. Kumar ordered a CBI probe on August 17.

The Srijan scam is likely to dominate the RJD’s ‘BJP Bhagao, Desh Bachao’ rally, scheduled for August 27, which will have leaders from other parties also.


Manorama Devi’s rise to power began after her husband Avadhesh Kumar’s death in 1991 (he was a principal scientist at the erstwhile Indian Lac Research Institute in Ranchi). Although originally from Mithila Deep village in Madhubani, she, along with her three sons and two daughters, returned to Sabour in Bhagalpur, where her father had worked.

In 1996, she set up Srijan, a registered society for women in small income-generating activities such as stitching, making bindis, incense sticks, sattu etc.

Initially, she had a few sewing machines for stitching petticoats and blouses and worked out of a rented house. Gradually, she started developing contacts. She wanted to increase the membership of her organisation.

Manorama Devi, sitting in the centre, with her family members. (HT file photo.)
Manorama Devi, sitting in the centre, with her family members. (HT file photo.)

The turning point came in 2003 when KP Ramaiah, who was then the district magistrate of Bhagalpur, announced a scheme for 50% subsidy to women for the purchase of sewing machines. Srijan purchased 1000 machines from a vendor and all the women who got them became Srijan members.

“In 2003 she got over 24,000 square feet land on 30 years lease for a paltry sum of Rs 2400,” said a police official. “The land, adjacent to the block office, was marked for the office of her cooperative society and to start banking operations for her self-help groups (SHGs) in Sabour. But it was not exactly a bank as it was not affiliated to the central cooperative bank of Bhagalpur.” Srijan’s aura was such that many people in the area thought of it as a genuine bank.

“Now, police probe has revealed that the contract for a building initially meant for an Integrated Rural Development Project (IRDP) programme was also under Srijan’s control even before 2003,” said an official of the investigating wing.

KP Ramaiah supported Srijan’s various cooperative activities. He directed all the block development officers, rural development and panchayat members to put deposits with Srijan.

With government patronage, Srijan’s growth continued over the years. From an NGO that required grants to a ‘coop society bank’ offering loans to needy SHG members to having bank accounts in nationalised banks dealing with big government funds, Srijan’s fortunes rose sky-high, but no one ever questioned its meteoric rise. Especially because Srijan’s programmes and schemes were endorsed by who’s who of politics and the bureaucracy.


The scandal broke when a few cheques of the Bhagalpur district administration were dishonoured citing ‘lack of funds’ in the government account. The Bhagalpur police lodged the first FIR in the Srijan fund transfer scam on August 7 after a cheque of Rs 17.70 crore of the urban development department bounced due to lack of funds in the account. The following day, two more cases involving over Rs 350 crore surfaced. District magistrate Adesh Titarmare ordered an inquiry and reported the matter to the higher-ups.

Apparently, it was the failure of Srijan to replenish the principal amount in the department’s account on time that may have blown the lid off the scam.

The modus operandi was simple but daring. In connivance with bank and government officials, money that should have been in the government’s bank account was diverted to Srijan’s account. As the core banking network could not be tampered with (it could not show the money in the NGO’s account), specially-designed software was used to generate doctored e-statements of the bank to be used in the government files.

Pass books of members of Srijan Mahila Vikas Sahayog Samiti Ltd. (Arun Kumar/HT Photo.)
Pass books of members of Srijan Mahila Vikas Sahayog Samiti Ltd. (Arun Kumar/HT Photo.)

Jitendra Singh Gangwar, IG, Economic Offences Unit, who was entrusted with the initial probe, said that the whole exercise seemed to be meticulously planned with the tacit understanding of officials in the administration and banks. The idea was to embezzle the huge interest accruing from the fund transfers, while quickly transferring the funds back to the government account whenever a government cheque arrived. There were informers in the bank who would alert Srijan when government cheques were put into the bank.

This way, no cheques would bounce; no one would get suspicious.

Gangwar said the laptop (with the customised software installed in it), printer and pen drives were recovered from one Bansidhar Jha, a computer operator who worked for Srijan for a salary of Rs 20,000 a month. So far, over 18 persons have been arrested. Mahesh Mandal, one of the accused, who worked in Bhagalpur collectorate, died in judicial custody.

Bhagalpur SSP Manoj Kumar admitted that initially it was tough to unravel the modus operandi, as custodians of government funds were involved in the racket.

According to sources, vital signs about the scam were routinely ignored. In Saharsa, the government account had been left with just Rs 2 crore in 2014, while the special land acquisition officer had issued a cheque worth Rs 153 crore. Three days later, Rs 151 crore arrived in the account through Srijan. “Once the fund arrived, the matter was not taken forward,” said a water resource development official.


Chief secretary Anjani Kumar Singh has directed all districts to update their accounts. Some of the departments claimed to have reconciled their principal amount. But that isn’t the only matter under the scanner. A member of the initial probe team admitted that the bigger issue was to find out how long the government funds had remained out of the official accounts, what had happened to the interest and who benefited from these funds.

The scam has now spread beyond Bhagalpur. Fraudulent fund transfers have also been detected in Saharsa and Banka districts. FIRs have been lodged. Police sources said that more districts could come under its ambit, as irregularities had been going on for years. The money trail could lead back to government officers, bank executives, politicians.


As long as she was alive, the wily and unscrupulous Manorama Devi kept the scam going smoothly. But after her death, differences cropped up in the family, and people who had taken loans illegally from the NGO began to default in payment. The NGO began feeling the financial pinch, and had difficulties in timely replenishment of government money.

The palatial house of Manorama Devi, located in the Ishakchak locality of Bhagalpur, is locked with two caretakers inside. Neither claims to know the whereabouts of Amit Kumar and Priya (son and daughter-in-law of Manorama Devi).

“I have been here for just a month and don’t know for how long I have to stay here,” said Mukesh Kumar, 28, who earlier worked at Srijan’s Sabour office.

Another house barely 50 feet away, is also locked with a security guard outside. Three cars parked outside are covered with a layer of dust now, as they have clearly not been driven for a while.

But the dust is still to settle on the gigantic Srijan scam.


Anuska Devi, 55, had planned carefully for her two daughters, Sony and Pooja. Both are studying in intermediate at Sabour College.

She had plans to get them married after their graduation.

She saved ~20,000 in a fixed deposit in Srijan Mahila Vikas SS Limited in 2013 to get double the amount by 2020.

She is not even aware that the organisation where she deposited her money is under investigation and that she might never get her money back. “Wasn’t that a government bank?” she asked, showing her fixed deposit paper wrapped in polythene. “The money will be due in 2020. Maybe I will get the money then,” she said.

Many women in her village, Farka, two km from Sabour block office, became members of Srijan’s self-help groups.

Srijan virtually operated like a chit fund company from premises close to the block office to give an impression to gullible village women that it was part of the government. There were photographs of Manorama Devi with top officials at the entrance of the Srijan office to bolster her credibility.

Villagers recall that Manorama Devi’s brother-in-law Sunil was initially very active in drawing women to the self-help groups (SHGs) on the pretext that it could fetch them income as well as loans with small deposits.

“I started with a ~30 a month deposit in 2003 and gradually increased it to Rs 200,” said Sushma Devi, chairman of one SHG. The group also got loans on its total deposits at an interest of Rs 1.50 per Rs 100 per month. The loan amount would be distributed among those who needed it or it would be equally distributed among all.

Over 500 such groups of 10-12 members operated under Srijan. Each group had a chairman, secretary and treasurer. However, the passbooks and deposit receipts did not mention the word ‘bank’ anywhere though the office, now locked and guarded by security men, had the look and feel of a bank with a workforce of 80 people.

Many women, who took loans recently and are waiting for the due date to deposit the interest and premium, risk big losses. “I have received more than what I deposited. If required, I will return the money,” said Guriya Devi, 25, afraid of police action on the depositors.

Usha Devi, 35, said, “We used to get loans when needed. After her [Manorama Devi’s] death, things deteriorated. We went to the Srijan office after we got to know about the problem but returned as the office was locked.”

Usha Devi asked if anyone knew the whereabouts of Priya didi (the daughter-in-law of Manorama Devi ). Both Priya and Amit, who ran the Srijan affairs after Manorama Devi’s death, have vanished after the scam broke. The villagers remain oblivious of how the scam reached crores, with the help of the government agencies.

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    Arun Kumar is Senior Assistant Editor with Hindustan Times. He has spent two-and-half decades covering Bihar, including politics, educational and social issues.

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