Udupi Cooperative Bank Accused of Loan Fraud

Udupi: K Raghupathi Bhat, the former Udupi MLA has raised serious allegations of irregular loan disbursement practices at Mahalakshmi Cooperative Bank Ltd, a major urban cooperative bank in Coastal Karnataka.

In a media interaction at Manipal on Thursday, Bhat claimed that the bank mishandled loan transactions during the pandemic, inflating loan amounts well beyond what was initially disbursed to borrowers.

According to Bhat, several individuals recently sought his assistance, alleging that the bank's staff was attempting to recover inflated loan amounts. In particular, he highlighted cases where borrowers who had applied for loans of only Rs. 20,000 were later informed by the bank that they owed Rs. 2 lakh.

"Many borrowers were shocked to learn of the drastic difference, especially after believing they had fully repaid their original loan amounts," Bhat stated. He further alleged that discrepancies in loan disbursement processes, possibly involving misuse of funds, were responsible for this financial burden on borrowers.

Bhat emphasised that his support for the borrowers came only after they presented him with documents that corroborated their claims against the bank. He reported that a total of 1,418 individuals had fallen victim to these alleged irregularities and called for a Special Investigation Team (SIT) to look into the matter. Bhat noted that the alleged fraud took place at the Malpe branch of the bank.

In response, current Udupi MLA and bank chairman Yashpal Suvarna refuted the allegations, asserting that they were baseless and politically motivated. Suvarna maintained that the bank operated with strict financial discipline and confirmed his openness to any investigation, including one by an SIT. He pointed out that the loans in question were disbursed over three years ago, with a recent court order mandating recovery efforts.

This situation has intensified the apparent rivalry between the former and current MLAs, both from the BJP.