The Enforcement Directorate (ED) has arrested Amar Sadhuram Mulchandani, former chairman of Pune-based co-operative bank Seva Vikas Cooperative Bank, on charges of money laundering. The arrest is linked to an alleged fraud and misappropriation of INR4.2 billion (USD51 million) at the bank, the collapse of which caused losses to thousands of small depositors.
According to the ED, an investigation revealed that 124 non-performing asset (NPA) loan accounts were involved in the scam. The co-operative bank, which was reportedly run as a family proprietorship by Mulchandani, allegedly granted loans without following proper banking norms, in exchange for substantial kickbacks.
The ED further disclosed that more than 92% of the loan accounts had become non-performing assets, leading to the bank’s downfall. This is the fifth arrest made by the ED in connection with the case.
The investigation into Mulchandani and others started after multiple first information reports filed by the Pune police after complaints about the bank, and an audit conducted by the Registrar of Co-operative Societies. The audit allegedly exposed significant fraud and misappropriation of public funds.