In a widening investigation into financial misconduct at IDBI Bank, the Crime Investigation Department (CID) of Telangana has arrested five more individuals linked to a multi-crore loan fraud involving falsified documents and systemic exploitation of agricultural credit schemes.
The Unraveling of a Scheme Built on Forgery
In a case that highlights the vulnerabilities in rural credit delivery systems, the Telangana CID has exposed a meticulously orchestrated loan fraud scheme targeting IDBI Bank. The scam involved the disbursal of ₹2.86 crores in loans under the Kisan Credit Card (KCC) and Micro Loan schemes through forged documents and collusion between bank insiders and external agents.
The most recent arrests—B Vengal Rao, B Jaganatham, Y Haribabu, M Rajashekhar, and P Konda Babu—all residents of Bhadradri Kothagudem district, reveal the second layer of operatives behind the fraud. These individuals allegedly played a crucial role in preparing forged pattadar passbooks (land ownership documents) and fake seals used to deceive bank officials and push through hundreds of loan applications.
All five were produced before a magistrate and sent to judicial remand.
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How the Fraud Was Engineered: Inside the Bank’s Walls
The case originated from a formal complaint lodged by the Deputy General Manager of IDBI Bank, who raised alarms over suspicious loan disbursals at the Sattupalli branch between March 2015 and September 2016.
At the center of the operation was Nallagopula Ramesh, then Branch Head of the Sattupalli IDBI branch, who allegedly colluded with Business Correspondent Chettipogu Suresh and his associates—Thati Chandra Rao and Merugu Shiva Krishna—to sanction ₹2.61 crore in loans to 279 borrowers under the KCC scheme, and ₹25 lakh to 26 individuals under the Micro Loans Scheme.
Many of these so-called “borrowers” were fictitious or ineligible, but their applications were greenlit on the basis of forged documentation.
An internal audit conducted during the 2018-19 fiscal year revealed glaring procedural lapses, including direct financial transactions between Ramesh and Suresh—suggesting kickbacks and collusion.
Revenue Records Reveal the Truth; CID Steps In
Following the audit red flags, the bank engaged revenue authorities to verify land ownership documents submitted by loan applicants. The inquiry confirmed that pattadar passbooks used in loan applications were fake and not in the government’s records.
This discovery prompted the registration of a criminal case. The CID took over the investigation and previously arrested Ramesh and Suresh, both of whom are now in judicial custody.
The latest arrests are expected to deepen the investigation as authorities probe the full extent of the fraud ring, including possible beneficiaries, money laundering trails, and gaps in the bank’s due diligence processes.
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Systemic Gaps and the Cost to Public Trust
This incident has not only cost the public sector bank nearly ₹3 crore in fraudulent disbursals but also raised troubling questions about the oversight mechanisms in agricultural lending. With fake documents slipping through bank scrutiny, and revenue records only checked retrospectively, the case underlines the urgent need for better verification systems, digital integration with land records, and stricter third-party audits.
As the CID continues to widen its net, more arrests could follow. For IDBI Bank and others operating in rural credit sectors, the fallout is more than financial—it’s reputational and systemic.