Mehsana Urban Cooperative Bank has filed a police complaint over a fresh case of loan fraud worth roughly Rs 10.88 crore, with three people booked for allegedly selling off mortgaged properties without clearing their loans. It is the second major fraud to surface at the same bank in under a year.
According to the complaint, three individuals, reported by Rakhewal Daily as a husband-and-wife pair along with an associate, took loans against mortgaged shops and other properties, then allegedly sold those same properties to third parties using forged documents, without informing the bank or repaying the outstanding amount. The scheme reportedly came to light only when the bank’s loan-recovery team tried to act on the collateral and found the properties already changed hands. Police are also examining whether bank staff were complicit in letting the mortgaged assets slip out of the bank’s control unnoticed.
A bank with a recent history
This is not Mehsana Urban Bank’s first brush with a major fraud case this cycle. Less than a year ago, an internal audit uncovered a much larger Rs 64 crore loan scam at the bank, which led to the arrest of its own CEO and a branch manager. That case involved loans sanctioned between 2016 and 2023 in alleged violation of RBI lending norms, disbursed for construction projects that were later found incomplete or undervalued. Two back-to-back fraud cases at the same lender, even if unrelated in their specifics, point to a governance gap that goes beyond a single rogue borrower.
Why this matters for depositors
Urban cooperative banks like this one sit outside the tighter regulatory scrutiny applied to scheduled commercial banks, even though they hold the savings of ordinary depositors: often traders, farmers and salaried families in smaller towns who trust a local institution precisely because it feels close to home. Mortgage fraud of this kind erodes that trust twice over: once when a borrower defaults by design, and again when it turns out the bank’s own internal checks failed to catch a property being resold while still pledged as collateral. For depositors, the practical concern is less about any single case and more about whether repeated lapses signal weak internal controls at the bank overall.
What happens next
Mehsana police have handed the case to the financial crime prevention branch, which is expected to trace where the proceeds from the property sales went and whether any bank official was aware of the resale. Given the bank’s prior fraud case is still working its way through investigation, cooperative sector regulators may face fresh pressure to review the lender’s lending and collateral-monitoring practices more broadly, rather than treating each case in isolation.
Sources: Sandesh, Rakhewal Daily, Gujarat Samachar
This report was compiled and written with AI assistance from publicly reported sources, and reviewed for accuracy.