Multi-crore fraud investigation at Sri Vasishta Credit Co-operative Bank gains momentum

Team Udayavani, Oct 10, 2024, 2:16 PM IST

The CID police have intensified their investigation into the multi-crore fraud at Sri Vasishta Credit Co-operative Bank, uncovering illegal investments made using the bank’s funds. Following this discovery, the government has ordered the seizure of properties worth over Rs 1.55 crore linked to the bank’s vice president and another individual.

After being dormant for the past three years, the investigation into the fraud case has regained traction. Based on information provided by thousands of depositors who invested in the bank, the CID team has identified a fraud amounting to approximately Rs 214 crore. The authorities are now tracing the misappropriated funds invested elsewhere by those involved.

As per government directives, two properties have been seized: a residential and commercial property valued at over Rs 1.20 crore in Hanumanthnagar, Bengaluru, belonging to Prabhakar, the bank’s vice president, and another property worth over Rs 35 lakh in Vaynalikaval, owned by a woman named Sandhya. Both properties were purchased several years ago, and their current market value is being reassessed.

Misuse of Depositors’ Funds
The investigation has revealed that the bank’s management and associates illegally acquired land and other assets using the funds collected from depositors. These funds were diverted for purposes other than what was originally intended. Additionally, it has been discovered that the bank accepted deposits in violation of legal procedures and misled the public through fraudulent financial dealings. Many depositors were not given the promised interest, services, or guarantees once their deposits matured.

Government Orders Asset Seizure
Under the 2004 Karnataka Protection of Depositors’ Interests in Financial Institutions Act, the government has ordered the seizure of assets belonging to Sri Vasishta Credit Co-operative Bank, its promoters, directors, managers, and any other individuals involved. The seized assets will be used to repay depositors who have been defrauded, as the bank has failed to fulfill its financial obligations.

Background of the Fraud
The fraud case first came to light in 2021 when hundreds of depositors, lured by the promise of high interest rates, found themselves defrauded after investing in the bank. The case, initially registered at Hanumanthnagar Police Station, was transferred to the CID in August 2021. Despite a state government order in December 2023 to hand over the investigation to the CBI, the agency showed little interest, leaving the CID to continue the investigation for the past three years.

When Will Depositors Get Their Money Back?
Depositors who invested amounts ranging from Rs 50,000 to over Rs 1 crore in the bank are eagerly awaiting the return of their principal amounts. The CID has already begun the process of seizing assets, and the government is considering ways to return the money to depositors. However, sources indicate that this process may take several more years.

“The CID is conducting a thorough investigation into the Sri Vasishta Credit Co-operative Bank fraud case. We are collecting all necessary evidence to ensure justice is served,” said Dr. M.A. Saleem, Director General of Police, CID.