The Directorate of Enforcement (ED), Kolkata Zonal Office, has taken significant action in the Andaman & Nicobar State Co-operative Bank (ANSCBL) fraud case by provisionally attaching 51 immovable properties valued at approximately ₹200.02 crore. The attached assets include hotels, resorts, and parcels of land across the Andaman & Nicobar Islands. This action was taken under the provisions of the Prevention of Money Laundering Act (PMLA), 2002.
The ED’s probe was initiated based on an FIR filed by the Crime & Economic Offences Police Station, Andaman & Nicobar Police under various sections of the Indian Penal Code (IPC). The FIR named Kuldeep Rai Sharma, former Member of Parliament and then Vice-Chairman of the bank, and his associates, alleging large-scale fraud and manipulation of bank loans.
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Shell Companies and the Loan Fraud Network
Investigations revealed that Sharma, along with his collaborators, created a network of 23 shell companies and numerous other entities to fraudulently secure large loans from ANSCBL. Loans amounting to ₹301.50 crore were sanctioned in the names of 21 shell companies, of which loans for 18 companies, totalling ₹271 crore, turned into Non-Performing Assets (NPAs). Overall, more than 100 high-value loans were issued in blatant violation of NABARD guidelines, RBI directives, and ANSCBL internal circulars.
Further analysis indicated that in high-value accounts (above ₹1 crore), the total NPA amount exceeded ₹420 crore, forming a substantial portion of the bank’s total NPAs.
Asset Diversion and POA Manipulation
The ED identified 51 immovable properties, primarily hotels, resorts, and land, which were directly or indirectly purchased from the proceeds of crime generated through the fraud. These properties were registered in the names of the accused, their family members, close associates, and companies under their control.
Investigators discovered that several land parcels and properties were acquired through Power of Attorney (POA) to conceal the actual transaction values. Approximately 25 land parcels worth ₹123 crore were identified, acquired via POA, and subsequently mortgaged by inflating the valuation to secure high-value loans in collusion with bank officials.
The investigation revealed that the loans were sanctioned without proper valuation, without evidence of genuine business activities, and without due diligence. The sanctioned funds were diverted through shell companies and cash manipulation, subsequently used to acquire immovable properties under associates’ names. With no legitimate business revenue generated, the loans inevitably turned into NPAs.
Accused and Their Network
Kuldeep Rai Sharma exercised significant influence over loan approvals. Key officials, including K. Murugan (MD) and K. Kalaivanan (Loan Officer), played active roles and were arrested during the probe. Evidence indicates that these officials received portions of the fraudulent proceeds.
Sharma also enlisted businessmen Sanjay Lal and Sanjeev Lal, who facilitated dummy directors and entries via shell companies. Massive loans were sanctioned to these entities as well, and a share of the cash proceeds was routed to Kuldeep Rai Sharma, the main accused.
Arrests and Judicial Proceedings
Earlier, the ED had arrested Kuldeep Rai Sharma (former MP and Vice-Chairman), Sanjay Lal (hotelier), K. Murugan, and K. Kalaivanan and filed a prosecution complaint on 14 November 2025 before the Hon’ble Special Court (PMLA), Port Blair, against 39 accused persons/entities. The court rejected all bail applications on 12 December 2025. Subsequently, on 10 February 2026, the Calcutta High Court (Circuit Bench, Port Blair) also dismissed the bail pleas of Sharma and Sanjay Lal.
ED Action and Way Forward
Investigations indicate that over ₹500 crore in loans has now turned into NPAs, with NPAs attributable to shell companies alone accounting for around ₹271 crore. The ED emphasized that this represents only a portion of the bank fraud and ongoing money-laundering activities. The agency continues to trace additional beneficiaries, shell companies, and related properties.
The attached properties include hotels, resorts, and land under the control of the accused and their associates. The ED confirmed that further attachments and legal actions may follow as new evidence emerges.
The agency reiterated that such economic crimes directly impact public trust, as banking and financial institutions operate on the basis of public confidence. ED underscored its commitment to strict enforcement against money laundering and bank fraud activities, stating that investigations remain ongoing.
About the author – Ayesha Aayat is a law student and contributor covering cybercrime, online frauds, and digital safety concerns. Her writing aims to raise awareness about evolving cyber threats and legal responses.
