<p>The president and former vice-president of a Bengaluru-based credit cooperative society have been arrested along with three loan defaulters for embezzling Rs 90 crore, according to police.</p>.<p>One of the defaulters is the chairman of a well-known chit fund.</p>.<p>The co-op in question is Kuruhinasetty Souharda Credit Co-operative Limited, located on Puttanna Chetty Road, Chamarajpet. The scam took place during three terms of the bank’s elected office-bearers — 2011-2016, 2016-2021 and 2021-2022.</p>.<p>The scam came to light in August when the co-op allegedly refused to let depositors withdraw their fixed deposits (FD) worth Rs 90 crore. According to the depositors, the office bearers had given loans to ineligible people without any security and took commissions.</p>.<p>Based on complaints from 17 depositors, the Kempegowda Nagar police registered two FIRs — one in August and another in October — against 15 people.</p>.<p>Police investigations culminated in the arrest of B L Srinivas, 64, president of the co-op; Eshwarappa B, 71, a former vice-president; and alleged loan defaulters Dayananda Hegde, 50, Chandrashekar P, 55, and B T Mohan, 75. Mohan is the chairman of Surabhi Chits Limited.</p>.<p>According to the police, the office-bearers colluded with one another to sanction loans to the chosen few without checking the documents. The verification process was so lax that loans were given on the basis of photocopies of the required documents, police added.</p>.<p>Police said Srinivas held key positions, such as director, president and vice-president, at the co-op for over 12 years. Eshwarappa was vice-president for 10 years.</p>.<p>Police believe that Srinivas and Eshwarappa gave loans that were more than the collateral value. In some cases, multiple loans were sanctioned against a single mortgaged property. Bank officials also allegedly colluded with Surabhi Chits Limited in giving defaulters loans.</p>.<p>Police investigations showed that the bank misappropriated depositors’ funds and bought mortgaged properties through relatives.</p>.<p>In the FIRs, police invoked IPC sections related to cheating, misappropriation and criminal breach of trust. In addition, they invoked relevant sections of the Banning of Unregulated Deposit Schemes Act, 2019, and the Karnataka Protection of Interest of Depositors in Financial Establishments Act. </p>.<p>Among the complainants are Madan and his wife Chayalakshmi. Both have had accounts with the bank since 2015 and invested over Rs 1.5 crore in several FDs since January 2020.</p>.<p>One of Madan’s FDs matured on August 8 while six more are pending maturity. Madan was shown a document that stated that the matured FD had been deposited in his account but he had not received the money.</p>.<p>When he contacted the bank’s office-bearers, he was shocked to learn that some of them had resigned in April as the bank incurred a loss of Rs 40 crore in 2021, according to the FIR.</p>.<p>The FIR further states that the depositors were threatened with dire consequences when they demanded their money back.</p>
<p>The president and former vice-president of a Bengaluru-based credit cooperative society have been arrested along with three loan defaulters for embezzling Rs 90 crore, according to police.</p>.<p>One of the defaulters is the chairman of a well-known chit fund.</p>.<p>The co-op in question is Kuruhinasetty Souharda Credit Co-operative Limited, located on Puttanna Chetty Road, Chamarajpet. The scam took place during three terms of the bank’s elected office-bearers — 2011-2016, 2016-2021 and 2021-2022.</p>.<p>The scam came to light in August when the co-op allegedly refused to let depositors withdraw their fixed deposits (FD) worth Rs 90 crore. According to the depositors, the office bearers had given loans to ineligible people without any security and took commissions.</p>.<p>Based on complaints from 17 depositors, the Kempegowda Nagar police registered two FIRs — one in August and another in October — against 15 people.</p>.<p>Police investigations culminated in the arrest of B L Srinivas, 64, president of the co-op; Eshwarappa B, 71, a former vice-president; and alleged loan defaulters Dayananda Hegde, 50, Chandrashekar P, 55, and B T Mohan, 75. Mohan is the chairman of Surabhi Chits Limited.</p>.<p>According to the police, the office-bearers colluded with one another to sanction loans to the chosen few without checking the documents. The verification process was so lax that loans were given on the basis of photocopies of the required documents, police added.</p>.<p>Police said Srinivas held key positions, such as director, president and vice-president, at the co-op for over 12 years. Eshwarappa was vice-president for 10 years.</p>.<p>Police believe that Srinivas and Eshwarappa gave loans that were more than the collateral value. In some cases, multiple loans were sanctioned against a single mortgaged property. Bank officials also allegedly colluded with Surabhi Chits Limited in giving defaulters loans.</p>.<p>Police investigations showed that the bank misappropriated depositors’ funds and bought mortgaged properties through relatives.</p>.<p>In the FIRs, police invoked IPC sections related to cheating, misappropriation and criminal breach of trust. In addition, they invoked relevant sections of the Banning of Unregulated Deposit Schemes Act, 2019, and the Karnataka Protection of Interest of Depositors in Financial Establishments Act. </p>.<p>Among the complainants are Madan and his wife Chayalakshmi. Both have had accounts with the bank since 2015 and invested over Rs 1.5 crore in several FDs since January 2020.</p>.<p>One of Madan’s FDs matured on August 8 while six more are pending maturity. Madan was shown a document that stated that the matured FD had been deposited in his account but he had not received the money.</p>.<p>When he contacted the bank’s office-bearers, he was shocked to learn that some of them had resigned in April as the bank incurred a loss of Rs 40 crore in 2021, according to the FIR.</p>.<p>The FIR further states that the depositors were threatened with dire consequences when they demanded their money back.</p>