Ludhiana: A former bank manager has been booked by Ludhiana Rural Police in a ₹3.90 crore fraud case involving alleged misuse of the Centre’s flagship lending scheme, Pradhan Mantri Mudra Yojana (PMMY), after an internal audit revealed large-scale irregularities in loan approvals and fund transfers.
The accused, identified as Pankaj, a resident of Jind in Haryana, was earlier posted as a branch manager at the Baddowal village branch of Indian Overseas Bank in Ludhiana district. The case was registered following a complaint filed by Uma Kanta Samal, Senior Regional Manager at Indian Overseas Bank, Civil Lines, Ludhiana.
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According to the complaint, the alleged fraud came to light during a routine internal audit conducted by the bank, which uncovered suspicious loan transactions under the PM Mudra Yojana, a government-backed scheme aimed at providing collateral-free loans to small and micro enterprises.
Investigators found that 22 loans were allegedly generated without supporting documents or proper verification procedures. These loans were sanctioned under the scheme but were later identified as fraudulent entries created using unauthorised access to official banking systems.
The complaint further states that Pankaj allegedly misused the login credentials of two colleagues—Archana Gupta, an assistant manager, and Karamjit Singh, a clerk—to process and approve the fake loan applications. The funds from these loans, amounting to ₹3.90 crore, were subsequently transferred into his personal bank account.
Bank officials have alleged that the entire operation was carried out in violation of established banking protocols, including Know Your Customer (KYC) norms, documentation checks, and loan approval guidelines mandated under the PM Mudra Yojana framework.
During the investigation conducted by the bank’s internal audit team, discrepancies were found in loan records, borrower identities, and transaction trails. The audit report indicated that no legitimate beneficiaries existed for the sanctioned loans, strengthening suspicions of systemic manipulation within the branch operations.
Officials further stated that the accused had access to sensitive banking systems due to his managerial position, which allegedly enabled him to bypass internal checks and authorisation layers by exploiting staff credentials.
The FIR mentions that during questioning, the accused reportedly admitted to his involvement in the fraudulent activities, although police have not independently verified the extent of the confession. Investigators are now examining digital records, login histories, and transaction logs to determine the full scope of the alleged fraud and identify any possible accomplices.
The complaint submitted by the senior regional manager also highlights potential lapses in supervisory controls and raises concerns over internal security mechanisms within the branch. Authorities are reviewing whether additional employees or external parties may have been involved in facilitating the illegal transactions.
Police officials said that the case has been registered against Pankaj under relevant sections of the Indian Penal Code related to cheating, criminal breach of trust, and forgery. Further investigation is underway to trace the flow of funds and determine whether the diverted money was transferred to multiple accounts or routed through intermediary channels.
The case has also prompted an internal review within Indian Overseas Bank to assess compliance failures and strengthen monitoring systems to prevent similar incidents in the future. Officials indicated that disciplinary action and recovery proceedings may also be initiated based on the outcome of the investigation.
Police said the investigation is at an early stage and further arrests cannot be ruled out as digital evidence and financial trails are being closely examined.
