- Raids conducted at 15 Bengaluru locations in money laundering case against N Srinivas Murthy
- Murthy is chairman of Sushruti Souharda Cooperative Bank; family members hold key roles
- Bank stopped paying interest on deposits from 2021-22; customers unable to close FDs
The Enforcement Directorate, the federal agency that probes major financial crimes, carried out raids at 15 locations in Bengaluru in a money laundering case against N Srinivas Murthy, the founder of the Sushruti Souharda Cooperative Bank.
Mr Murthy is the bank's chairman, his wife Dharani Devi the director, and daughter Mokshatara the functional director. They and their close associates were named in police cases across Bengaluru for alleged collusion and siphoning of public funds.
The FIRs against Mr Murthy were based on allegations that the bank stopped paying interest to its customers on their fixed deposits and savings accounts. The bank's employees had allegedly brushed off the non-payment claims, citing "server issues."
How people were lured
Mr Murthy allegedly lured people by promising high interest rates, encouraging them to open FDs and term deposits, and collecting huge deposits from customers who opened accounts in their names and those of their family members.
He later started the Shruti Souharda Credit Cooperative Society and made his brother-in-law, BV Satish, its chairman. His nephew Deepak G became its vice chairman.
The customers initially received interest, but after 2021-22, neither did they receive any interest, nor were they allowed to close their FDs. Many were allegedly defrauded in this manner.
How fraud was carried out
Mr Murthy allegedly set up multiple financial institutions, such as Shri Lakshmi Mahila Co-operative Society, which was run by his second wife, and duped people there as well by collecting deposits.
He purchased several properties in his name as well as those of his family members and close friends. He himself chaired every crucial bank committee - loan, investment, audit, etc. This gave him full control over the use of bank funds.
He gave loans to close associates without any guarantees, most of which were never repaid. The loan amounts were often withdrawn in cash or funnelled back into accounts of Mr Murthy, his family members, or his business entities.
How was money laundered?
Mr Murthy allegedly routed the money through bank accounts of his family members, relatives, and close associates to obscure the original source. This is a classic method of money laundering, involving multiple bank accounts and property purchases that make black money appear legitimate.
