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The Enforcement Directorate has provisionally attached 40 properties valued at approximately Rs 121.35 crore in connection with an alleged fraud case involving the Andaman and Nicobar State Co-operative Bank. The Kolkata Zonal Office II issued the provisional attachment order on November 5, 2026, under the Prevention of Money Laundering Act, covering 35 immovable properties and five movable assets. The newly seized assets include parcels of land, Joye Grand Hotel, two semi-submarine tourist vessels, and balances held across three bank accounts. With this latest order, the total value of assets attached in the ongoing money laundering probe has reached approximately Rs 326.91 crore.
Shell Companies and Systematic Loan Diversion
The federal agency initiated its money laundering investigation following an FIR registered by the Crime and Economic Offences Police Station of the Andaman and Nicobar Police against former Member of Parliament Kuldeep Rai Sharma and others. According to investigators, Kuldeep Rai Sharma, who also served as the vice chairman of the bank, conspired with bank officials and associates to sanction massive credit facilities through shell entities in direct violation of banking regulations. The disbursed funds were subsequently diverted into personal holdings and were never repaid to the lending institution.
Inquiries revealed that the accused individuals floated 23 shell firms with no actual business operations, appointing associates and other persons as dummy directors. Loans amounting to approximately Rs 301.50 crore were sanctioned to 21 of these shell firms, out of which credit facilities worth Rs 271 crore across 18 entities turned into non-performing assets. The borrowed capital was either withdrawn in cash or routed through a complex web of intermediary accounts to purchase real estate and other assets registered under the names of family members and close associates. Significant illegal loans were also sanctioned to multiple other commercial firms, including enterprises owned by the family members of the former parliamentarian, pushing the total estimated proceeds of crime in this case beyond Rs 500 crore.
Inflated Valuations and Bribes for Loan Approvals
Senior management at the bank, including Kuldeep Rai Sharma and managing director K. Murugan, who has since died, reportedly demanded and collected bribes amounting to roughly five percent of the sanctioned loan values. Agency findings show that loans were frequently approved far in excess of allowable limits, with kickbacks retrieved directly in cash or channeled through shell companies. Most of the attached properties were either purchased directly using diverted loan funds or pledged as collateral to secure further fraudulent credit.
A bank-empanelled valuer assisted the accused syndicate by drastically inflating asset figures in official loan documentation. In several instances, land bought for around Rs 1 crore was appraised at Rs 10 crore or more to facilitate higher credit limits. Among the 35 immovable properties, 15 were acquired via powers of attorney or sale agreements executed under the names of borrowers, accused persons, and dummy directors, before being mortgaged to the bank at heavily inflated valuations.
Vessels and Hotel Assets Brought Under Attachment
The provisional attachment also covers the land and commercial building of Joye Grand Hotel, alongside two semi-submarine tourist vessels imported from Croatia at a cost of about Rs 2.11 crore. Although the marine vessels were registered in the name of Andaman Escapades Private Limited, the probe revealed that they were procured for Kuldeep Rai Sharma using proceeds from a fraudulent loan sanctioned to a shell firm named Heyday Hospitality Services Private Limited.
The Enforcement Directorate previously arrested Kuldeep Rai Sharma, K. Murugan, loan officer K. Kalaivanan, and hotelier Sanjay Lal in connection with the investigation. A prosecution complaint was filed on November 14, 2025, before the Special PMLA Court in Port Blair against 39 accused persons and entities. Earlier, the agency had attached 51 properties valued at Rs 205.56 crore on February 10, 2026, an order later confirmed by the Adjudicating Authority on August 4, 2026. Further investigation into the financial fraud remains underway.
