Ludhiana Police have booked a bank employee for allegedly siphoning off ₹3.9 crore by misusing the Pradhan Mantri Mudra Loan Yojana (PMMY) at a branch of Indian Overseas Bank in Baddowal.
The branch manager, allegedly created fake loan accounts to embezzle funds under the scheme. An FIR has been registered at Dakha police station on the complaint of the bank’s Regional Manager, Umakanta Samal.
Mudra Loan is a collateral free loan scheme of the central government. Under this scheme, public can take loans from banks to set up their businesses without providing any security.
According to the complaint, the fraud came to light during a routine review in January 2026, when the Regional Office noticed an unusual spike in agricultural and allied loans disbursed in December 2025, far exceeding the branch’s normal pattern. A surprise inspection was conducted on January 16 and it revealed major irregularities.
Several accounts lacked loan applications, appraisal reports, KYC documents and verification records, highlighting that loans were processed without due diligence.
Investigators suspect the accused created fake loan accounts in the names of relatives, friends and known persons, and sanctioned loans without authorization.
Police said the funds were later diverted through RTGS transactions into the accused’s personal bank account in Haryana. The bank has identified 22 such loan accounts involving about ₹3.9 crore, with an outstanding amount of over ₹3.88 crore.
In its complaint, the bank described the fraud as “systematic, continuous and pre-planned,” involving misuse of official position and manipulation of records. The accused has been placed under suspension.
