A massive financial fraud amounting to ₹21.47 crore has been detected at the Gonda branch of Uttar Pradesh Co-operative Bank Ltd, with an FIR registered against 16 individuals, including three former branch managers, bank staff and account holders. The case has been lodged at the Kotwali Nagar police station, following a special audit and an internal inquiry conducted by the bank.
Based on the audit findings, police have initiated a criminal investigation into what officials describe as a “systematic and organised misuse” of bank funds. The audit report confirms widespread violations of Reserve Bank of India (RBI) guidelines and the bank’s own internal lending policies.
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Loans sanctioned without eligibility checks
According to the special audit conducted by a chartered accountant, loans were sanctioned in several cases without conducting mandatory eligibility checks. Income certificates, collateral valuation reports and other essential documents were either not verified or were completely absent.
The audit further reveals that multiple loans were approved on the basis of forged and fabricated documents. Risk assessment norms were bypassed, and approvals were granted at the branch level without following prescribed procedures.
The report notes that the pattern of irregularities points not to procedural negligence but to deliberate manipulation of the loan disbursement system.
Illegal withdrawals from internal accounts
Investigators have also uncovered unauthorised withdrawals from five internal bank accounts. A total of ₹46.13 lakh was illegally debited and transferred to various accounts before being withdrawn and misappropriated.
In addition, ₹2,101.65 lakh belonging to account holders was diverted through different banking channels and misused. The audit confirms that the combined misappropriation amounts to ₹2,147.78 lakh, or ₹21 crore 47 lakh 78 thousand.
The movement of funds, auditors noted, followed a consistent pattern designed to evade detection.
Use of family-linked accounts
The inquiry has revealed that funds siphoned off in the name of loans and internal transfers were routed through accounts linked to family members of key accused persons. Amounts were transferred to accounts held in the names of close relatives, including immediate family members.
The audit categorises this as a classic indicator of organised financial crime, aimed at concealing the source and trail of illegally diverted funds.
Irregularities spread over three-and-a-half years
As per the audit report, the financial irregularities occurred in phases between December 2021 and June 2025. During this period, several branch managers and employees were posted at the Gonda branch, and the role of each has come under scrutiny.
Based on documentary evidence, 16 individuals have been named in the FIR, including three former branch managers, a former assistant/cashier and multiple account holders who allegedly benefitted from the fraudulent transactions.
Police are currently examining loan files, digital transaction records, KYC documents, internal approvals and banking software logs. Officials said further names could be added to the case as the investigation progresses.
Serious questions over banking oversight
The exposure of a scam exceeding ₹21 crore has raised serious concerns about the oversight mechanisms and internal control systems within the co-operative banking sector. Depositors and customers have expressed anxiety over the safety of their funds, while the case has drawn attention at higher administrative levels.
Officials indicated that the investigation is being pursued on priority, given the scale of the fraud and the apparent breakdown of internal checks over an extended period.
Police said a charge sheet would be filed after completion of the investigation and that strict legal action would follow against those found responsible.
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.
