The Enforcement Directorate (ED) has arrested the president of a Bengaluru-based cooperative bank in a money-laundering case linked to alleged misappropriation of public funds to the tune of over Rs 1,000 crore, the agency said on Wednesday, February 16.
K Ramakrishna, president of Sri Guru Raghavendra Sahakara Bank Niyamitha, was subsequently produced before the principal city civil and sessions judge, who granted a four-day custody of the accused to the ED, it said in a statement. The probe agency said "officers and employees of the bank siphoned off the money deposited by the public with the bank".
"The bank promised to give higher interest rates to the depositors, which were not in line with the prevailing market rate. The money deposited by the depositors was advanced/siphoned off to various persons, including employees of the bank, without obtaining proper security for the loans," it said.
The agency alleged that the bank officials created "fictitious" loan accounts and transferred the money to these accounts, which in turn was transferred to overdue loan accounts for ever-greening purposes to show strong financial health of the bank.
Assets worth Rs 45 crore were attached by the ED in the case earlier, after it filed a money-laundering case against Ramakrishna and others in February 2020.
The case was filed after taking cognisance of a Bengaluru Police (Banaswadi police station) FIR registered under various sections of the IPC and the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004 against the accused.
The fraud came to light in early 2020, and in September that year, the ED filed a PMLA case on the basis of an FIR registered by Bengaluru police.
The police FIR was filed under various sections of the Karnataka Protection of Interest of Depositors in Financial Establishments (KPID) Act of 2004 against late V Maiya and others for embezzlement of more than Rs 1,500 crore collected from a large number of depositors, mostly senior citizens, through fixed deposits by promising them high rate of interest ranging from 12-16% every year.
On January 10, 2020, the Reserve Bank of India imposed restrictions on the Sri Guru Raghavendra Sahakara Bank restricting withdrawals to a limit of Rs 35,000 and directed the bank to not grant or renew any loans or advances. It was then made Rs 1 lakh, but the bank continues to be under the direction of the RBI, currently up until May 2022.