Executive Summary
The Enforcement Directorate (ED) has initiated a comprehensive investigation into the alleged embezzlement of funds amounting to approximately ₹85 crore at the Vaishali Shahri Vikas Cooperative Bank Ltd. in Bihar. This bank is promoted by Rashtriya Janata Dal (RJD) Member of Legislative Assembly (MLA) and former Bihar minister Alok Kumar Mehta. The investigation has led to the arrest of four individuals, including the bank’s former Chief Executive Officer (CEO), and has involved extensive search operations across multiple states.
Background
The Vaishali Shahri Vikas Cooperative Bank Ltd., established in the 1980s by Tulsi Das Mehta, father of Alok Kumar Mehta, has been a significant financial institution in Bihar’s cooperative banking sector. Alok Kumar Mehta succeeded his father as chairman in 1995 and held the position until 2012. Currently, his nephew, Sanjeev Mehta, serves as the bank’s chairman.
In December 2024, the Reserve Bank of India (RBI) conducted an inspection of the bank’s operations and uncovered significant financial irregularities. The RBI’s findings indicated that loans amounting to ₹85 crore were disbursed to 383 fictitious beneficiaries between April 2020 and December 2022. Subsequently, the RBI canceled the bank’s license on December 30, 2024, effectively ceasing its banking operations.
Investigation and Arrests
Following the RBI’s findings, the Enforcement Directorate launched a money laundering investigation stemming from multiple First Information Reports (FIRs) filed by the state police against the bank and its officials. The ED’s investigation revealed that the fraudulent activities involved the creation of nearly 400 fake loan accounts, with funds disbursed based on forged warehouse and Life Insurance Corporation (LIC) receipts.
On January 10, 2025, the ED conducted extensive search operations across 18 locations in Bihar, West Bengal, Uttar Pradesh, and Delhi. These searches targeted premises linked to RJD MLA Alok Kumar Mehta and other associated entities.
Business and Finance News India
The individuals arrested include:
- Vipin Tiwari: Former CEO of Vaishali Shahri Vikas Cooperative Bank Ltd.
- Ram Babu Shandilya: Father-in-law of Vipin Tiwari.
- Nitin Mehra: Associate involved in the alleged fraud.
- Sandeep Singh: Associate involved in the alleged fraud.
These individuals were presented before a Prevention of Money Laundering Act (PMLA) court and have been remanded to judicial custody.
Allegations Against Alok Kumar Mehta
Alok Kumar Mehta, a senior politician affiliated with the RJD and an MLA representing the Ujiarpur constituency in Bihar, is among the promoters of the Vaishali Shahri Vikas Cooperative Bank. The ED alleges that bank employees and other beneficiaries acted in collusion with Mehta to perpetrate the fraud. The fraudulent activities reportedly involved the creation of nearly 400 fake loan accounts and the disbursement of funds based on forged warehouse and Life Insurance Corporation (LIC) receipts.
Political Implications
The involvement of a prominent RJD leader in this financial scandal has significant political ramifications in Bihar. Alok Kumar Mehta has previously served as the state’s Minister for Revenue and Land Reforms and is considered a key figure within the RJD. As of now, neither Mehta nor the RJD has issued an official statement regarding the ED’s actions.
Conclusion
The ED’s arrests and ongoing investigation into the alleged embezzlement at Vaishali Shahri Vikas Cooperative Bank Ltd. underscore the agency’s commitment to addressing financial crimes and money laundering activities. The case also highlights the need for stringent regulatory oversight in the cooperative banking sector to prevent such fraudulent activities in the future.
References
- ED arrests 4 in Bihar co-op bank fraud case
- Enforcement Directorate raids RJD MLA, others in Bihar cooperative bank case
- ED raids RJD MLA, others in Bihar co-op bank ‘fraud’ PMLA case
- ED raids properties of Bihar RJD MLA Alok Mehta in bank loan scam probe
- ED raids 19 locations in probe against Bihar bank linked to RJD leader for fraud
Sources
