The investigation into the multi-crore Andaman and Nicobar State Cooperative Bank (ANSCB) fraud has intensified, with the Crime and Economic Offence Police Station of the CID filing a voluminous chargesheet and the Enforcement Directorate (ED) making the first arrests under money laundering provisions in the Islands. Together, the twin developments have placed the spotlight on one of the largest financial scams in the history of the Union Territory.
On September 19, the CID filed a chargesheet running over 50,000 pages before the Hon’ble Court, naming 100 persons and firms. Among those chargesheeted are former Member of Parliament and ex-ANSCB Chairman Kuldeep Rai Sharma, Managing Director K. Murugan, and Loan Officer K. Kalaivanan. Eight of the accused, including senior bank officials and dummy directors of shell firms, have so far been arrested and remain in judicial custody.
The chargesheet alleges a systematic conspiracy at the highest levels of the bank’s management. Investigators claim the accused misused their positions to sanction overdraft and high-value loans in violation of Credit Management Assessment norms, NABARD and RBI guidelines, and even the bank’s own lending policies. These violations, the CID maintains, were not accidental lapses but deliberate acts designed to benefit shell companies and associated individuals.
The investigation has uncovered 23 shell firms with no genuine business activity, created solely for the purpose of availing fraudulent loans and diverting funds. The loans routed through these entities alone are estimated at â‚ą316.5 crore. Seized evidence includes 91 loan files, 19 mortgage and loan registers, 16 board registers, hundreds of cheques and deposit slips, and electronic devices containing conversations between accused persons. A detailed forensic audit was conducted with assistance from NABARD, the Registrar of Cooperative Societies, and experts from nationalised banks to trace fund flows and identify beneficiaries.
The siphoned funds were diverted into immovable properties, land holdings, and luxury assets registered in the names of relatives and close associates of the accused. Many of these assets are now under attachment proceedings as “proceeds of crime.” Statements of more than 200 witnesses and accused persons have been recorded, and officials say the investigation is still far from over. Additional names and firms are expected to surface as seized documents undergo further scrutiny, and supplementary chargesheets are likely in the coming months.
Parallel to the CID probe, the ED has initiated its own investigation under the Prevention of Money Laundering Act (PMLA), 2002. On September 17, the agency arrested Sharma, Murugan, and Kalaivanan, making them the first individuals ever detained by the ED in the Andaman and Nicobar Islands. The Special Court has remanded Sharma and Kalaivanan to eight days of ED custody, while Murugan remains in judicial custody.
The ED investigation, launched on the basis of the FIR registered by the Crime and Economic Offence Police Station, has so far revealed that over 100 loan accounts were misused. Preliminary findings suggest that Sharma and his associates benefitted directly from loans amounting to nearly â‚ą230 crore. Murugan and Kalaivanan are alleged to have played key roles in arranging loans for associates in exchange for a five percent commission, routed through shell entities or paid in cash.
The ED has conducted multiple search operations, examining more than 30 premises since July, including those linked to shell companies. Investigators claim to have unearthed patterns of layering and diversion of funds, with substantial portions withdrawn in cash and distributed among senior bank officials. Evidence points to a coordinated network where fraudulent loans were sanctioned and systematically siphoned off for personal enrichment.
Officials describe the scandal as unprecedented in scale, both in terms of the amount involved, pegged at over â‚ą500 crore in non-performing assets, and in the number of people implicated. The probe has raised questions about regulatory oversight in cooperative banking and the vulnerability of smaller financial institutions to systemic fraud.
For now, both CID and ED maintain that the probe will continue to expand. Central agencies are being roped in for technical and forensic support, and more arrests and asset seizures are expected. The filing of the chargesheet and the ED’s arrests mark a decisive step in unearthing what is now being called the largest banking fraud in the history of the Andaman and Nicobar Islands.
