Mumbai: The Enforcement Directorate (ED)’s money-laundering probe related to Pune’s Seva Vikas Co-operative Bank has revealed that it was allegedly being run like a family proprietorship, without following any prudent financial norms and viable security. More than 92% of the loan accounts had allegedly turned into non-performing assets (NPA), agency sources said.
ED had initiated its investigation on the basis of multiple FIRs registered by the Pune Police on the basis of complaints of the bank and the audit conducted by the Registrar of Cooperative Societies. “Loans were being sanctioned without any viable security and without ascertaining the credit worthiness of the applicants in return for massive kickbacks,” an ED source said.
RBI cancelled bank's licence in Oct 2022 after a fraud was pointed out in investigation
“The audit conducted by the Registrar of Cooperative Societies had pointed to large-scale fraud and misappropriation of public funds causing a loss of Rs 429 crore to the Seva Vikas Cooperative Bank,” the source said. Last October, the RBI had cancelled the bank’s licence on grounds that 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 probe disclosed that the bank’s former Board of Directors had violated banking norms while sanctioning loans to shell entities. The agency has under its scanner loan funds worth Rs 429.6 crore spread across 126 accounts declared as NPA. As per the audit report’s findings, these funds were allegedly misappropriated.
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