Sri Vijaya Puram, July 31: In a significant escalation of the ongoing ₹147 crore cooperative bank fraud probe, the Enforcement Directorate (ED) on Thursday conducted simultaneous raids at multiple locations across Sri Vijaya Puram and nearby areas. The raids target individuals associated with the Andaman & Nicobar State Cooperative Bank Ltd (ANSCBL), including former bank officials, politically linked beneficiaries, and business premises suspected to be involved in laundering the proceeds of crime.
Sources confirmed that the ED teams are working in coordination with local police and CID units, executing search operations to trace assets allegedly acquired through fraudulent loans sanctioned by the cooperative bank. The central agency is investigating the case under the Prevention of Money Laundering Act, 2002 (PMLA), a stringent criminal law that allows ED to attach properties derived from illicit financial activity and prosecute those involved before a special court.
The current wave of raids follows a series of explosive developments in the cooperative bank case. Earlier this month, the CID arrested former bank vice-chairman K. Subramanian and four others after uncovering a pattern of irregular loan approvals without due diligence. The scandal widened with the arrest of a local tour operator, M. Sajid, for allegedly securing large loans against forged documents and non-existent collateral. These arrests were followed by the dramatic detention of former Member of Parliament and ex-chairman of the cooperative bank, Kuldeep Rai Sharma, who was taken into custody from a private hospital in Sri Vijaya Puram amid allegations of misuse of office and political interference in loan processing.
The Wave Andaman had earlier reported that loans were sanctioned under Sharma’s leadership by ignoring standard creditworthiness checks and bypassing mandatory documentation. Internal audits and early findings by the CID had revealed that many of the defaulted loans were processed in violation of banking norms, often without proper collateral and in some cases, to shell entities. As the scandal unfolded, ED began evaluating the potential for money laundering under PMLA, which empowers the agency to track the flow of illicit funds, freeze assets, and ensure criminal prosecution of offenders.
Investigators believe that a significant portion of the defrauded funds may have been funneled into high-value assets, such as real estate and vehicles, both within the islands and possibly outside. With the ED now formally involved, officials say the focus has shifted to financial forensics, identifying the end-use of disbursed loans and determining if proceeds were layered through shell businesses or family members to mask their origin.
The Wave Andaman’s continuing coverage had previously detailed how the cooperative bank’s non-performing assets had crossed 58%, sparking public outrage and political tensions. Civil society groups, trade unions, and opposition leaders have since demanded wider probes by central agencies, including the Central Bureau of Investigation and the Income Tax Department. Many have also called for structural reforms in the functioning of cooperative banks in the islands, citing poor oversight and political patronage.
According to ED insiders, if assets traced during today’s raids are confirmed to be connected to the fraud, they may be provisionally attached under Section 5 of the PMLA. This would be a prelude to criminal prosecution and eventual confiscation of the property. The agency is also expected to file a prosecution complaint before the Special Court designated under PMLA once sufficient evidence is gathered.
With today’s action, the case has moved decisively from a local fraud probe to a full-scale financial crime investigation under central scrutiny. The ED’s enforcement actions are expected to continue in phases, with more attachments, summons, and possibly arrests likely in the coming weeks. For earlier reports on the cooperative bank scandal, including the arrest of key accused and public reactions, readers can refer to The Wave Andaman’s coverage at thewaveandaman.com
