ED raids nine locations in Yavatmal over alleged Rs 242 crore Babaji Date Mahila Sahakari Bank fraud

The Enforcement Directorate (ED) on Thursday searched about nine locations in Yavatmal district. The searches are part of a money laundering investigation into alleged large-scale financial irregularities at the now-defunct Babaji Date Mahila Sahakari Bank.

The searches were carried out under the provisions of the Prevention of Money Laundering Act (PMLA). The probe is based on several FIRs registered by Awadhutwadi police station in Yavatmal against bank officials, employees and some borrowers.

ED officials are examining whether loan money was allegedly diverted elsewhere and how the related financial transactions were carried out. Premises linked to people allegedly connected with the case were searched in the operation.

The action follows a 2022 decision of the Reserve Bank of India. After complaints of alleged fraud and alleged misappropriation of depositors' money, the Reserve Bank had cancelled the licence of Babaji Date Mahila Sahakari Bank.

The Maharashtra government then ordered a special audit of the bank's finances. According to officials, the audit found serious irregularities in the sanction and disbursal of loans.

The investigation has allegedly found that the bank's chairman, chief executive officer, directors and other officials were involved in sanctioning loans in alleged collusion with borrowers, valuers and auditors.

Investigators suspect that loans were sanctioned and disbursed without adequate collateral and without properly examining the beneficiaries' capacity to repay. Officials said the money was allegedly diverted for purposes that went against the bank's bye-laws, its internal loan policy and Reserve Bank guidelines.

The ED is now tracing the money trail to establish how the allegedly diverted funds were transferred and where they were used, and to identify all those who may have benefited from the transactions.

According to the allegations under investigation, about Rs 242 crore was defrauded through alleged collusion among the bank's chairman, officials and loan beneficiaries. The PMLA probe began on the basis of the FIRs registered by Yavatmal police, and the ED is tracing the proceeds allegedly obtained through the suspected banking irregularities.

The searches aim to gather documentary and digital evidence related to loan sanction, disbursal, collateral, financial transactions and the alleged movement of funds.

Details of the cash, documents, digital devices or other material seized in Thursday's searches were not immediately available. The investigation is continuing.