A major financial scam involving two Bengaluru-based cooperative banks has been pegged at Rs 2,402 crore, making it one of the largest such scams in Karnataka. The banks involved are Sri Guru Raghavendra Sahakara Bank and its sister concern, Sri Guru Sarvabhauma Souharda Credit Cooperative Ltd.
Despite the scale of the fraud, investigations into the case have stalled. The Central Bureau of Investigation (CBI), which was requested to take over the case by the Karnataka government in 2023, has not pursued it. In response to a Right to Information (RTI) query filed by a depositor, H M Manjunathaiah, the CBI stated in August 2024 that it was not investigating the case.
The Criminal Investigation Department (CID), which had initially probed the scam, is now focused on attaching properties linked to the accused. According to senior police sources, the CID has identified 86 individuals involved in the scam, although 11 of them have since died. The fraud impacted 41,778 depositors, who collectively lost Rs 2,402 crore, including Rs 921 crore in principal amounts.
A CID report obtained by Deccan Herald (DH) reveals that the scam began in 2009 and was uncovered in 2020 after depositors raised concerns with the Reserve Bank of India (RBI). They complained that the banks had failed to pay the promised interest on their deposits. The RBI subsequently ordered the banks to halt accepting new deposits and demanded an internal inquiry report. However, the bank failed to comply with the RBI’s request.
The first complaint was lodged in February 2020 by the CEO of the cooperative bank at the Banaswadi police station, which was later handed over to the CID. The CID filed two charge sheets in connection with the scam, naming 28 accused in each. The investigation has continued on a year-by-year basis, with additional charge sheets expected.
The CID has also identified assets worth Rs 1,115.70 crore linked to the accused. These properties are being processed for attachment to repay the defrauded depositors. However, it remains unclear when or how the funds from the liquidated assets will be distributed among the victims.
While the state government is considering setting up a special investigation team (SIT) to further probe the scam, no decision has been made yet. In the meantime, depositors, like Manjunathaiah, have expressed frustration with the lack of transparency and progress in the investigation.
“It has been four years, and we are still waiting. There is little hope,” Manjunathaiah said.
In addition to the CID’s efforts, the Enforcement Directorate (ED) has also launched an investigation into the scam and attached assets worth over Rs 50 crore. However, there have been no updates on the ED’s progress. Manjunathaiah remains hopeful that the assets seized by the ED may eventually provide some financial relief to the defrauded depositors.
