ED probing co-ops nationwide after Mumbai bank overstates Rs500 cr in deposits

The Enforcement Directorate (ED) is investigating nearly 300 district co-operative banks across the country after the Shamrao Vithal Co-operative Bank in Mumbai falsely reported Rs1,400 crore in deposits post-demonetisation.

On a scrutiny of the bank's accounts, the ED has found that it had actually received only Rs900 crore in 'deposits' and the remaining Rs500 crore was merely an overstatement by the bank to the Reserve Bank of India (RBI).

The RBI referred the case of Shamrao Vithal Co-op along with the reports of other such co-op banks to the ED for investigation. According to a source, ED officials suspect massive money laundering, and have asked the Mumbai bank to provide all transaction details for examination.

A Times of India report quoting an unnamed functionary of the bank said there was no response from the bank till late on Tuesday evening.

The ED has asked the 300 district co-operative banks to provide CDs containing details of all deposits and other transactions, particularly the deposits made since the demonetisation of Rs500 and Rs1,000 notes on 8 November, the rport said.

The ED will examine cash deposits, money transfers through RTGS (real time gross settlement), new accounts opened since demonetisation, and accounts these banks may have in other government and private commercial banks where they deposit their collections.

The government has asked the income tax department and the CBI to join the probe against co-operative banks.

The RBI had recently alerted the government on a sudden surge in deposits in district and urban co-operative banks that lack proper monitoring mechanisms.

While the I-T department will investigate the transactions of all state co-operative banks, the CBI has been asked to probe urban co-operative banks, which are more in number. The ED will look into transactions of district co-operative banks.

A few big co-operative banks have reported deposits of more than Rs 10,000 crore since demonetisation, though the window of deposit was available to them only for a few days after 8 November.

Source said many of these cooperative banks, spread particularly across states like Maharashtra, Tamil Nadu and Kerala, are controlled by politicians, who generally use farmers as fronts to launder money.