A suspected subsidy fraud under the One District One Product (ODOP) scheme has raised serious concerns over banking oversight and monitoring systems. Allegations suggest that an audit conducted in 2023 had already flagged irregularities, but the findings were not acted upon for nearly three years. During this period, about ₹57 crore in subsidy was disbursed to 625 units, with preliminary scrutiny indicating irregularities exceeding ₹6 crore.
Subsidy allegedly recycled through fixed deposits
Investigators found that certain firms linked to the Bank of India’s Dadanagar branch allegedly used fixed deposits (FDs) to repeatedly avail ODOP loans and claim subsidies multiple times.
In one instance, a loan of about ₹5 crore reportedly fetched a subsidy of nearly ₹20 lakh. The loan amount, along with additional funds, was then used to create new FDs in the names of relatives or associated entities, enabling fresh loans and another ₹20 lakh subsidy on the same financial base.
Sources claim this cycle was repeated at least 11 times, leading to an alleged wrongful gain of around ₹2.20 crore in government subsidy.
Certified Cyber Crime Investigator Course Launched by Centre for Police Technology
Audit findings allegedly ignored
The pattern was reportedly detected in the second audit report of 2023, but no immediate corrective action followed. It is alleged that subsidy amounts were routed into multiple accounts using individual staff login credentials, raising questions about internal controls.
Bank officials have so far declined to issue an official statement on the matter.
Eight bank employees under questioning
A probe at the Bank of India’s Mumbai headquarters is said to be nearing completion. Eight employees from the Dadanagar, Rania, Sisamau and Kaushalpuri branches have been questioned. Administrative action is likely once the final report is submitted, according to sources.
Separate departmental inquiry by industry department
The state industry department has constituted a separate team to examine possible departmental lapses. Officials said strict action, including dismissal, could follow if any officer is found complicit. The department is currently awaiting the bank’s final findings.
Issue raised in Legislative Council
The matter has also been raised in the Legislative Council, with demands for a high-level investigation and action against those responsible. Concerns were expressed that irregularities in ODOP—meant to support small enterprises—undermine genuine beneficiaries and lead to misuse of public funds.
Questions over oversight mechanisms
Experts say that if the allegations are substantiated, the case could expose systemic weaknesses in loan monitoring, subsidy verification and audit response mechanisms. Repeated approvals of loans and subsidies without triggering risk alerts point to possible control failures.
Next steps in investigation
The inquiry will proceed on two fronts:
- Forensic examination of banking processes and login usage
- Verification of beneficiary units and linked entities
Legal action against responsible officials and beneficiary firms is likely after the final reports are filed. Authorities have indicated that monitoring frameworks under the ODOP scheme will be tightened to ensure greater transparency and prevent recurrence.
About the author – Rehan Khan is a law student and legal journalist with a keen interest in cybercrime, digital fraud, and emerging technology laws. He writes on the intersection of law, cybersecurity, and online safety, focusing on developments that impact individuals and institutions in India.
