In a major crackdown on alleged financial irregularities, police in Uttar Pradesh have arrested a former branch manager of a state-run cooperative bank in connection with a ₹21-crore scam involving unauthorised loans, forged records and systematic diversion of depositor funds. The arrest follows an internal audit that flagged serious violations in the functioning of the bank’s Maharajganj branch.
According to officials, the accused was taken into custody from the Manakapur bypass area in Gonda district after evading arrest for several weeks. The case was registered after a complaint was filed by senior bank officials based on findings of an internal audit and a subsequent review by an external audit team.
Certified Cyber Crime Investigator Course Launched by Centre for Police Technology
Audit Reveals Systematic Financial Manipulation
Preliminary investigations suggest that the alleged scam was carried out through a well-planned mechanism involving manipulation of loan accounts and misuse of banking systems. Audit reports indicate that loan amounts were increased without the knowledge or consent of account holders, while repayments were allegedly adjusted using funds from unrelated accounts.
Officials probing the case said the irregularities were not isolated incidents but appeared to be part of a coordinated operation involving bank staff and external associates. The fraudulent activities are believed to have taken place over an extended period, allowing the misappropriation to grow to over ₹21 crore.
The case has been registered under multiple sections relating to criminal breach of trust, cheating and forgery.
Fake Fixed Deposits and Bank Correspondent Arrest
In a related development, police in Kakori arrested a banking correspondent operating near the Shakuntala Mishra University campus for allegedly duping more than 50 customers by issuing fake fixed deposit receipts and siphoning off crores of rupees.
The accused, associated with a branch of Bank of Baroda, is alleged to have targeted account holders by exploiting their trust and limited access to digital banking records. Police said that at least 24 victims submitted a joint complaint, with women accounting for a significant number of those affected.
Investigators believe that the correspondent used forged documents and misleading assurances to convince customers that their deposits were securely invested, while the funds were allegedly diverted for personal use.
Institutional Complaint Triggered Police Action
The cooperative bank scam came to light after the bank’s internal vigilance and audit mechanisms flagged anomalies in branch operations. Based on these findings, a formal complaint was lodged, naming multiple individuals, including former bank officials and external collaborators.
Police sources confirmed that at least 16 people were named in the initial complaint, and efforts are underway to identify the full extent of involvement. Several suspects are still at large, and raids are being conducted at multiple locations.
The cooperative bank involved operates under the Uttar Pradesh State Cooperative Bank, which has initiated parallel departmental action alongside the criminal investigation.
Focus on Loan Files and Account Trails
Investigators are currently examining loan files, transaction histories and suspicious accounts flagged during the audit. Special attention is being paid to cases where loan limits were enhanced without borrower approval and where repayments were allegedly routed through unrelated customer accounts.
Officials said forensic analysis of banking software logs and account trails is underway to establish accountability and quantify individual roles in the scam.
Depositor Trust Under Strain
The case has once again raised concerns over governance and oversight in cooperative banking institutions, particularly in semi-urban and rural areas where customers rely heavily on branch officials and banking correspondents.
Law enforcement agencies have urged account holders to regularly verify their balances, loan statements and deposit records, and to immediately report discrepancies.
More Arrests Likely
Police officials indicated that further arrests are likely as the investigation progresses. Authorities have assured that all those involved in the alleged fraud—whether bank insiders or external facilitators—will be brought to justice.
Overall, the ₹21-crore cooperative bank scam underscores the growing challenge of financial fraud within institutional systems and highlights the critical need for stronger internal controls, real-time audits and customer awareness to protect depositor interests.
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.
