Bhubaneswar. In a major banking fraud case, the Economic Offences Wing (EOW) of the state crime branch has arrested two officials of a public sector bank for allegedly misappropriating ₹5.21 crore through fraudulent gold loan disbursals.
The accused officials are said to have sanctioned loans using fake gold ornaments and manipulated documentation over a sustained period.
Collusive Sanctions and Designated Branch Roles
The arrested individuals have been identified as Chandan Kumar Mahala (45), who was serving as chief manager, and Debendra Niranjan Sahu (55), posted as senior associate-cum-cash-in-charge at the Balichandrapur branch in Jajpur district. Their arrests follow the earlier detention of the branch’s gold appraiser Prashanta Kumar Mallick, who was taken into custody on April 22 for his alleged role in the scam.
According to the complaint filed by the bank on February 10, irregularities were detected in gold loan accounts sanctioned between October 2024 and July 2025. Investigators found that the accused officials, in collusion with the gold appraiser and other staff, had manipulated loan approvals and bypassed mandatory verification procedures.
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Non-Existent Collateral and Audit Discrepancies
Officials stated that a total of 105 gold loan accounts were fraudulently sanctioned. Out of these, 31 loans were backed by fake gold ornaments, while 74 loans were issued without any physical collateral. The internal audit conducted by the bank later revealed missing loan documents, forged borrower signatures, and absence of mandatory valuation reports from empanelled goldsmiths.
The gross weight of gold reportedly pledged for these loans was 10,646.58 grams, which was later confirmed to be fake or non-existent. Investigators believe that the scam was executed in a coordinated manner by exploiting internal approval mechanisms and weak verification checks within the branch.
Bypassing Standard Scrutiny and Official Mandates
The EOW has stated that Mahala and Sahu abused their official positions by approving loans without proper scrutiny of pledged assets. They allegedly bypassed standard procedures, ignored empanelled valuers, and failed to verify purity, eligibility, and documentation before sanctioning loans. These lapses allowed fraudulent disbursals to continue undetected for months.
The scam came to light during a routine inspection conducted on July 14, 2025. During the audit, officials discovered discrepancies in loan files and missing documentation. When questioned, the gold appraiser Prashanta Kumar Mallick reportedly failed to produce required records and subsequently absconded, triggering a deeper investigation into the branch’s operations.
Signature Forgery and Account Tracking Operations
As the probe intensified, authorities uncovered evidence suggesting collusion among multiple staff members. The investigation led to the arrest of several individuals connected to the branch and its loan processing system. The EOW confirmed that the accused conspired to sanction loans against fake collateral and siphon off funds through manipulated accounts.
During interrogation, investigators found that the fraud involved systematic manipulation of borrower records, including forged signatures and fabricated gold valuation reports. Officials also suspect that multiple fake identities may have been used to obtain loans, raising concerns about wider involvement beyond the currently arrested individuals.
The case has prompted a broader review of gold loan practices within the bank, with authorities examining internal control failures and compliance lapses. Investigators are also assessing whether similar irregularities occurred in other branches.
Officials confirmed that the probe is ongoing and further arrests are possible as more evidence is being analyzed. The involvement of additional staff members and external facilitators is also under scrutiny, with agencies examining financial trails linked to the fraudulent disbursals.
Authorities emphasized that strict action will be taken under relevant sections of the law once the investigation is completed. The case has highlighted serious concerns regarding oversight mechanisms in gold loan approvals and the need for stronger verification systems in public sector banks.
