The former management of Bengaluru-based Sri Guru Raghavendra Sahakara Bank (SGRSB) indulged in an accounting fraud of massive proportions, a fresh letter alleges.
According to a letter written by Kantilal Tated, who has about Rs 37 lakh stuck in his bank deposits at SGRSB, to Prime Minister Narendra Modi, the bank's former management indulged in a ledger-level fraud.
"The management made a big blunder in the book of accounts, created fake loan accounts, closed loan accounts without getting payments, made many bogus debit and credit entries," the letter, in possession of DH, said. When contacted, Ashokan R, current administrator of the SGRSB, declined to comment.
Ledger level frauds are usually hard to detect in the auditing process as they happen at a very micro level.
"The chartered accountants of this Bank endorsed the fake figures shown by the bank," the letter states, also alleging callousness by the Reserve Bank of India.
The central bank had imposed a set of restrictions on the Bengaluru-based urban co-operative bank (UCB) in January 2020 for the "next six months or until further review" at the time. The bank was not allowed to carry out any further transactions and the amount of withdrawal allowed to each depositor was limited to Rs 35,000.
After the RBI move, depositors, many of them elderly, stood in long queues to withdraw the permitted amount. The limit of withdrawal was raised to Rs 1 lakh in June - which once again saw queues - despite the coronavirus pandemic having started by then.
After the RBI's crackdown, the crisis at the UCB has only deepened: K Raghavendra, the president of the bank and his wife have gone missing while the former CEO M Vasudeva Maiya was found dead.
In September 2020, the Enforcement Directorate (ED) attached properties worth Rs 45.32 crore of various key management personnel of the bank on allegations that they had diverted the bank’s funds to buy these properties by transferring loan amounts to fictitious accounts which were then used to buy assets.
The ED has also initiated investigations against several executives on allegations of embezzlement of over Rs 1,500 crore collected from depositors promising them interest rates ranging from 12 to 16% per annum.