The Enforcement Directorate (ED) on Wednesday arrested one more person in connection with an alleged ₹200-crore loan fraud at the Andaman and Nicobar State Cooperative Bank (ANSCB), expanding the scope of its money laundering probe in what is fast emerging as one of the biggest financial crime investigations in the Union Territory.
The arrested individual, identified as Sri Vijaya Puram-based hotelier Sanjay Lal, has been alleged by investigators to have procured large loans through fraudulent means for business purposes. According to officials, the loans were allegedly obtained by manipulating bank records and exploiting systemic loopholes within the cooperative banking network.
A team of ED officers from Kolkata is currently stationed in Sri Vijaya Puram to oversee the investigation. Lal has been remanded to judicial custody while the agency continues to examine the money trail and determine possible links with other accused persons. Notably, Sanjay Lal’s name does not figure in the police charge sheet filed recently, although a close relative of his is mentioned in it. Officials said further arrests and property attachments are expected as the probe progresses.
According to sources, Sanjay Lal is known to own several residential properties and land parcels in Sri Vijaya Puram and Havelock Island, among other locations, which are now under scrutiny as part of the agency’s financial tracing exercise. Investigators are assessing whether some of these assets may have been created through diverted funds.
At the centre of the ED’s investigation are a select group of local businessmen who, between them, have borrowed more than ₹50 crore from the bank. According to documents reviewed by The Wave Andaman, one of the key borrowers—who runs a construction company and owns a resort in Havelock among other assets—figures prominently in the bank’s top debtor list but has so far not been taken into custody by the local police, even as several former bank officials, including former chairman Kuldeep Rai Sharma, have already been arrested.
The ED, which conducted its first-ever raids in the Islands on 31 July, has now assumed a central role in the case. The agency carried out coordinated searches at multiple premises in Sri Vijaya Puram and Kolkata under the Prevention of Money Laundering Act (PMLA), seeking evidence of fund diversion, shell entities, and unaccounted transactions.
The Enforcement Directorate functions under the Union Ministry of Finance and is empowered to investigate offences related to money laundering, foreign exchange violations, and financial crimes with inter-state or international links. Its powers derive from statutes such as the PMLA, the Foreign Exchange Management Act (FEMA), and the Fugitive Economic Offenders Act. It can conduct searches, seize assets, attach properties, and prosecute individuals involved in the laundering of proceeds of crime.
While the Crime and Economic Offences Wing of the UT police had initiated the probe earlier this year and made initial arrests, the ED’s involvement has significantly widened the scope and momentum of the investigation.
Sources told The Wave Andaman that several loan accounts under scrutiny have turned into non-performing assets (NPAs), raising red flags about borrower intent and internal controls within ANSCB. Investigators are now examining whether the funds were misused for asset creation or layered through proxy firms.
During the early phase of the local investigation, a junior employee of one of the key firms was arrested, but the primary proprietor remains under official scrutiny and has not yet been detained. Local police officials declined to comment on the status of the investigation or the timeline of further action.
During the searches, ED teams reportedly recovered internal bank records, property documents, and digital data pointing to a complex web of transactions. Investigators believe that some loan approvals may have been facilitated through internal collusion—an angle that both central and local agencies are continuing to examine.
The original FIR filed by the police had flagged a pattern of large, unsecured overdrafts, inadequate borrower verification, and repeated disbursal of funds to entities with limited financial standing. With the ED stepping in, the focus has now shifted from a routine banking fraud case to a potential money laundering investigation with national implications.
According to one senior official familiar with the matter, the case goes beyond default and points to the systematic misuse of cooperative credit and structured diversion of funds. The agency is expected to initiate further action in the coming weeks, including possible summons, property attachments, and forensic tracing of associated accounts.
With enforcement attention intensifying, the case has brought unprecedented scrutiny to the Union Territory’s financial ecosystem and could redefine oversight norms for cooperative banking in the Islands.
