The Enforcement Directorate has searched around nine premises in Maharashtra’s Yavatmal district as part of a PMLA investigation into alleged financial irregularities at Babaji Date Mahila Sahakari Bank. The probe follows FIRs registered by Yavatmal Police concerning alleged irregularities in loan sanctioning and suspected diversion of funds involving bank officials, employees and borrowers. Investigators are examining financial transactions to determine whether any diverted funds generated proceeds of crime under money-laundering laws. The alleged fraud is valued at around ₹242 crore, according to officials.
ED Raids Nine Locations In Yavatmal Cooperative Bank Money Laundering Case
The Enforcement Directorate raided 9 premises in Yavatmal over alleged financial irregularities at Babaji Date Mahila Sahakari Bank and an alleged Rs 242 crore fraud.
The Yavatmal cooperative bank money laundering case took a turn for the worse on Thursday as the Enforcement Directorate raided around nine places in Maharashtra’s Yavatmal district.
The searches are happening under the Prevention of Money Laundering Act (PMLA) in connection with several FIRs registered at Avdhutwadi Police Station in Yavatmal.
The FIRs have named officials and employees of Babaji Date Mahila Sahakari Bank and borrowers for alleged irregularities in sanctioning of loans and subsequent diversion of funds.
The ED officials said they are probing whether the funds were diverted or misappropriated in any manner after the cooperative bank disbursed the loan proceeds.
The probe is focused on alleged financial transactions between the bank officials and borrowers and other persons associated with the suspected irregularities.
ED raids Yavatmal premises in PMLA investigation
The enforcement action follows registration of a PMLA case based on the FIRs filed by Yavatmal police in the alleged financial irregularities.
Officials said the searches were at multiple locations connected to the investigation, but no additional information was immediately available on possible seizures.
The alleged fraud is to the tune of Rs 242 crore, and the investigators are probing the suspected involvement of the bank's chairperson and officers.
Officials said the alleged fraud took place in collusion with the loan beneficiaries, but the allegations are still under investigation.
The ED is also probing financial transactions to ascertain whether the alleged diversion of bank funds resulted in proceeds that attract the provisions of money laundering laws.
The case involves Babaji Date Mahila Sahakari Bank, a cooperative bank located in Yavatmal, which had its banking licence cancelled by the Reserve Bank of India in 2022.
RBI action preceded the money laundering probe
The RBI, in an order dated November 9, 2022, cancelled the licence of Babaji Date Mahila Sahakari Bank, and the banking operations ceased from the close of business on November 11.
The RBI said its regulatory action was based on concerns about the bank’s financial position, including inadequate capital and earning prospects.
The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra, was directed to initiate winding-up proceedings and appoint a liquidator after cancelling the licence.
Accordingly, the bank was prohibited from carrying on banking business, including the acceptance and repayment of deposits, in accordance with the relevant banking laws and regulations.
The earlier regulatory action is an important context to the current investigation, which is separately probing alleged financial irregularities and suspected diversion of loan funds.
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Alleged loan irregularities under ED scrutiny
Officials said the Maharashtra government had ordered a special audit following complaints concerning the bank’s financial affairs and alleged misappropriation of depositors’ money.
The audit allegedly uncovered irregularities in the approval and disbursement of loans, and officials, borrowers, valuers and auditors allegedly linked to the transactions.
Loans were approved without adequate collateral and without sufficient assessment of borrowers’ repayment capacity, raising questions about internal controls, the investigators say.
The loan amounts were then allegedly misappropriated in violation of the bank’s bye-laws, lending policy and guidelines of the Reserve Bank of India.
The ED’s investigation will track the flow of funds, including transactions involving borrowers and others allegedly involved in the suspected diversion of money.
Sprouts News understands the latest searches are part of an investigation, and that any allegations against any person or entity are not final findings.
Investigation continues after nine-location searches
The ED has not disclosed full details of the material seized during Thursday's searches or the operation's further findings.
The agency’s ongoing inquiry is expected to look into financial records, transaction trails and the alleged roles of bank officials, borrowers and associated persons.
The proceeds of crime, if any, arising out of the alleged financial irregularities would be covered under the Prevention of Money Laundering Act, which will be decided during the course of legal proceedings, the official said.
Further developments may include further searches, inspection of records, interrogation of persons connected with the case or other investigatory actions.
The full outcome of Thursday’s operation has not yet been announced by authorities, leaving the investigation ongoing as agencies examine the alleged Rs 242 crore financial irregularities.
