ED arrests one more accused in Sri Guru Raghavendra Co-op Bank fraud case

A file photo of customers of Sri Guru Raghavendra Sahakara Bank Niyamita gathered outside the bank in Basavanagudi after learning about the alleged irregularities, January 13, 2020.

Enforcement Directorate (ED) officials arrested a borrower and defaulter, identified as Rajesh V.R., under the Prevention of Money Laundering Act (PMLA), on the charge of misappropriation of pubic deposits of more than ₹1,000 crore, in Bengaluru on February 23.

Rajesh, according to the ED, is a major beneficiary of the funds siphoned off from Sri Guru Raghavendra Sahakara Bank Niyamitha in connivance with the management.

As per the RBI’s inspection report, he has availed loans of ₹40.40 crore from the bank, and is yet to repay the same.

The investigation unearthed multiple FIRs against Rajesh and his wife pertaining fraud in other cooperative banks and societies also.

The ED had attached movable and immovable properties belonging to the accused valued at ₹45.32 crore. The same was confirmed by the Adjudicating Authority (PMLA), New Delhi in an order dated March 10, 2021.

ED officials produced Rajesh before the Principal City Civil and Sessions judge who granted three days of custody for further investigation.

Earlier, an Enforcement Case Information Report (ECIR) was recorded by the ED based on an FIR registered under various sections of the Indian Penal Code and under section 9 of Karnataka Protection of Interest Depositors in Financial Establishments Act, 2004 by Bengaluru police against the bank and others.

According to the ED, the bank promised a high interest rate to depositors, which was not in line with the prevailing market rate. The bank officers created fictitious loan accounts, and transferred the money to these accounts without proper scrutiny of the loans. The funds were then transferred to overdue loan accounts for evergreening purposes to show strong financial health of the bank.

In February 2022, K. Ramakrishna, president of Sri Guru Raghavendra Sahakara Bank, was arrested by the ED for money laundering.