Sri Vijaya Puram: The Registrar of Cooperative Societies, Andaman and Nicobar Islands, has constituted a monitoring committee to supervise asset recovery operations of the Andaman and Nicobar State Cooperative Bank (ANSCB), amid heightened regulatory scrutiny of the lender’s past lending practices.
ANSCB is a registered cooperative society and functions under the supervisory and regulatory purview of the Registrar of Cooperative Societies, among other authorities, including sectoral regulators applicable to cooperative banks.
The development follows an ongoing investigation into alleged financial irregularities at the bank, in which loans were purportedly extended to shell entities against collateral that investigators say was fictitious or significantly overvalued, triggering multiple enforcement actions.
As reported earlier by The Wave Andaman on December 12, Enforcement Directorate investigators probing the alleged ₹500-crore ANSCB fraud have frozen 130 bank accounts holding a total of ₹2,62,73,756.26, according to the ED chargesheet reviewed by The Wave Andaman. The provisional attachments were issued under the Prevention of Money Laundering Act (PMLA) and represent one of the most extensive financial actions so far in a case that has already seen multiple arrests of political figures, bank officials and businessmen.
Recovery under watch
The chargesheet highlights a sharp mismatch between the alleged scale of the fraud and the recoveries made so far. While the suspected diversion in the alleged fraud is estimated at close to ₹500 crore, the funds traced and frozen to date amount to less than one per cent of that figure. Investigators have stated that this disparity suggests extensive layering and dissipation of funds over several years, leaving only limited balances by the time enforcement agencies initiated action.
Notably, under Reserve Bank of India and NABARD norms, cooperative banks such as ANSCB are restricted from extending loans against non-commercial land as collateral and are subject to exposure limits on lending to a single borrower or group. Investigators have observed that a number of loan accounts under scrutiny in the alleged fraud appear to have breached these regulatory parameters, with borrowings allegedly exceeding prescribed limits and being secured against collateral not permitted under prevailing norms, according to people familiar with the probe.
Sources told The Wave Andaman that while a significant portion of the collateral involved in the alleged fraud is land-based, in several cases the realizable market value of these assets could be materially lower than the government-notified circle rates used at the time of loan sanction. As a result, officials cautioned that full recovery from such assets may not be feasible in all cases.
According to sources, the newly constituted monitoring committee has been mandated to oversee the identification, safeguarding and recovery of assets linked to loan accounts under investigation in the alleged fraud. The panel is expected to monitor recovery timelines, review valuation practices, and ensure that asset recovery efforts are aligned with ongoing legal proceedings and investigative findings.
In a related development, a meeting chaired by the Chief Secretary of the Andaman and Nicobar Administration was held in October to review the status of recovery of loans and advances by ANSCB. During the meeting, the Vice Chairman and the Managing Director of the bank informed that an amount of ₹27.16 crore had already been recovered from non-performing asset (NPA) accounts since April 2025.
The Chief Secretary advised the bank to further intensify recovery efforts from NPA account holders to bring down NPA levels within prescribed regulatory norms, officials said.
Separately, sources close to the bank said its operations have stabilised since the crisis linked to the alleged fraud came to light in May this year. Several branches have reportedly mobilised fresh deposits from the public in recent months, reflecting a gradual improvement in depositor confidence even as investigations and recovery efforts continue.
