Decoding Sri Guru Raghavendra Sahakara (SGRSBN) Bank Scam

A well-choreographed scam involving bank management, bank-staff, politicians, auditors. What role did RBI and RCS play?

A well-choreographed scam involving bank management, bank-staff, politicians, auditors. What role did RBI and RCS play?
A well-choreographed scam involving bank management, bank-staff, politicians, auditors. What role did RBI and RCS play?

Despite RBI conducting a biannual and annual inspection, it has been continuously overlooking egregious activity that is going in the bank for the reasons best known to its officials.

On a winter morning of January 10, 2020, most unsuspecting depositors of Sri Guru Raghavendra Sahakara Bank Niyamitha (SGRSBN) came near the bank. A few of them had by now realised that they cannot withdraw more than Rs. 35000/-. They wanted to know more but were told it is a temporary arrangement due to some issue of compliance and that following March 31 everything should be alright. Even the MP of this constituency Tejaswi Surya on 13th January through various media interviews assured depositors that nothing serious has happened and the Finance Minister is monitoring the situation and that issue will be resolved very soon. Then most depositors realised that Restriction U/s 35A of BR Act 1949 (AACS) has been imposed on the Bank for a period of six months and all-inclusive direction has been placed so that withdrawal limit is permissible only up-to Rs.35000/-. The reality started to sink in that something serious has happened and depositors were convinced that it was just a temporary step.

There has been a deep-rooted conspiracy of the bank management to usurp public money by various methodologies like sanctioning loans to unscrupulous elements without proper security, giving a high rate of interest on deposits, giving exorbitant commissions to agents who bring in new deposits etc.

However, the truth started emerging in layers. First, it was told by the Bank management that there are some compliance issues where RBI had asked for some pending documents and once submitted, the restriction will go. However, when it took long and no communication was forthcoming from the bank, management slowly started by telling the customers that there is some issue of NPA which needs attention. Some pending loan recovery needs to be done which would automatically remove this restriction. On this, it was told that loan recovery from the defaulters is in full swing and Bank CEO Mr Santhosh used to give a daily account of loan recovery being made. This went on for a few months, and as per Santhosh, the scoreboard kept ticking, but no tangible changes were seen in terms of the safety of our money with RBI giving no access to the genuine information, no clarity on the impending situation on the ground. It was told that RBI had asked to make a loan recovery of Rs.375 crores, and capitalization of about 200 crores and all NPA loans be dealt with utmost priority but nothing moved. Bank management would give depositors some data and give false assurance but nothing happened on the ground, be it recovery or capitalization.

Then resentment of depositors started which resulted in the Board of Director and bank management being superseded by the Registrar of Cooperative Societies on the recommendation of RBI. Mr Diwakar KCS was appointed Administrator of Sri Guru Raghavendra Bank on May 18 2020.

However, before this happened, towards the end of March 2020 just before Covid Restrictions were imposed nationwide there was an entry of 3 important politicians; Mr Tejaswi Surya, MP Bangalore, Mr Ravi Subramanya, MLA Basavanagudi Constituency, and Mr Uday Garuduachar, MLA Chickpet Constituency. Their entry was assumed by many a depositor as a great boon and that these politicians would contribute towards the recovery of this bank but Covid restriction and pandemic helped bank management and these politicians in their capricious misdemeanours. However, after bank management was superseded, directors including Mr Ramakrishna, president and other directors went into hiding. In the meantime, a Public Interest Litigation was filed for the reconstruction of the bank seeking direction to punish those who inflicted this scam on depositors.

In the meantime, Mr Diwakar, Administrator of this Bank with his limited knowledge of Banking and mandated for Liquidation of the started proceeded in that direction. He upon assuming charge gave accounts and liquidity position recommended enhancement of withdrawal limit from Rs.35000 to Rs.100000 and enhancement of Rs.65000/-. Further on multiple occasions, it was found that he gave an affidavit to the court stating that loan recovery was either not happening or very low. Chief Justice Bench of High Court of Karnataka which is hearing this PIL passed strictures on the administrator for not able to do loan recovery and his inability to even start serving notices under SARFAESI Act to the borrowers and initiated Auction of Collateral Securities to recover borrowed money. Further, the High Court of Karnataka recommended a banking expert be appointed as an Administrator who understands banking and banking scams in order to understand the extent of damage and roadmap to recovery.

On November 10, 2020, Mr Ashokan retired General Manager was appointed as Administrator who upon assuming duties started to dig the details of this bank scam. As per Mr Ashokan, there has been a deep-rooted conspiracy of the bank management to usurp public money by various methodologies. Sanctioning loans to unscrupulous elements without proper security, evergreening of overdue loan accounts to show artificially low NPA, giving a high rate of interest on deposits, giving exorbitant commissions to agents who bring in new deposits, bank management misusing their position in the bank to help in money laundering and other nefarious activities thus putting depositors hard-earned money at stake.

A few staff members like Mr Vasudev Maiyya who committed suicide was the fountainhead of skulduggery followed by Muralidhar Erkady both of whom were colleagues in Karnataka Bank with a dubious background.

In fact, as per Mr Ashokan and as confirmed in the RBI inspection report, this bank has been involved in all those nefarious activities since 2008-09. It is a different matter that RBI, despite conducting a biannual and annual inspection, in addition to a truckload of reports that it seeks from the bank it has been continuously overlooking egregious activity that is going in the bank for the reasons best known to its officials. In fact, Mr Ashokan says that the scam may have started in 2001, however, RBI was blindfolded to find out any fraud happening, the way it could not find in any other bank across the country. RBI has all the paraphernalia required to detect any frauds, it has the best technology, huge budgetary allocations and well-trained staff to catch the fraud before it can cause havoc but usually chooses to appear on the scene like the police in Hindi movies, that is at the end. The only difference being Police usually didn’t know who was the villain but RBI is fully aware of who is the villain in most of the cases. RBI as a regulatory body has miserably failed on multiple occasions since its inception.

The Registrar of Cooperative Societies as a governing body of all the Cooperative Banks with huge staff and its hierarchy along with its paraphernalia has also failed miserably to detect and deal with sinister plans of these unscrupulous elements who are lurking to gobble public money. The legal system provides for enough provision in the form of the Karnataka Cooperative Societies Act which is there to be used for protecting the hard-earned money of the depositors but more often than not even RCS has shown its laxity in preventing fraudsters in Cooperative Movement to foist sinister design to defraud gullible depositors. Frequently officials are seen complicit with such elements to swindle public money and give them enough space to escape the punishment using frailties of the law.

Chartered Accountants of this Bank both Internal Auditors and External Auditors have played a major role in this entire scam. Chartered Accountants concocted accounts and prepared Audit Report year after year to suit the need of bank management showing conjured NPA figures and aided fraudulent bank management to show a very rosy picture of the bank financials and attract depositors with a high rate of returns on their investment be it Shares or Deposits and finally due to specious audit report destroyed the bank.

Staff in the Bank were part of this sinister plot to defraud depositors money by cooperating with bank management who have continuously plundered the bank. A few staff members like Mr Vasudev Maiyya who committed suicide was the fountainhead of skulduggery followed by Muralidhar Erkady both of whom were colleagues in Karnataka Bank with a dubious background. Muralidhar Erkady joined the bank giving forged documents of their employment records which were discovered by the current Administrator and a criminal case was filed against him.

In addition, there are other Staff members like Santhosh, Prashanth, Sripad Hegde who were arrested on charges of siphoning money from the bank for personal gain and a case is pending against them and they are out on bail like their mentors in Board Directors. Similarly, Politicians have also played important role in becoming a part of this scam as they gave all kinds of political backing and fertile ground to sow the seeds of chicanery so that they can also get a share of this illicit money. This entire scam which has been continuously perpetrated on the depositors for nearly 20 years has worked as a parallel system like an underworld where all gangster gang up together form their own rules, play by their own law and cheat the people at their own will as audaciously as they can with a feeling of indomitable spirit.

RBI & RCS which was governing body came into the PICTURE just like in the old Hindi movie where they asked the depositors to not move and let all perpetrators escape. Police as usual is like lame-ducks buckling under political pressure. The only ray of hope that seems to be dawning is from the Court. However, how long will it take is a question of reality. In the midst of all darkness lurking around, the depositors are running from pillar to post in order to find out their fate and fate of their hard-earned money, trying to find hope from a hopeless situation, trying to pray all gods who have not responded yet.


1. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.

A Freelance Journalist & a depositor in Sri Guru Raghavendra Sahakara Bank
Limited Residing in Bangalore
Harish V.
Latest posts by Harish V. (see all)


  1. Lesson to be learnt to everyone (in short)..

    1. Never trust a co operative society, if you are lured by their interest rates, pls ensure that particular society/bank is covered under DICGC scheme (guarantee up to 5 lakhs) and don’t invest more than this amount

    2. Risk minded persons can go behind such societies but be prepared for such backlashes

    3. Senior citizens should always go for the following schemes

    a) SCSS in post office/Nationalised banks
    b) PMVVY
    c) POMIS scheme on Post office
    d) FD/RD in banks /post offices

    Nothing other than these.. Only these are guaranteed

    3.Learn to tell “NO”.. It can be your friend/relative or anyone you know, he or she might be an agent somewhere, but it is your Hard earned money. You only have the sole right over it… So if someone approaches you asking for investing , Assuring you high returns, ask them one simple question “is your investment secured under DICGC? also the necessary proof for the same”.. You’ll know the reality..

    Lastly pls don’t fall for traps

  2. Kindly book a case in High Court seeking relief.
    How much loan amount recovered so far
    How much disbursed to depositors.
    Balance however small may be disbursed to all depositors immediately without waiting for recovery in progress.

  3. I am very much worried and would like to request Asokan Sir to answer whether RBI and RCS would definitely together come out saying nothing gonna happen with this bank for the Economic crisis situation today bcoz of Covid , is that the Crisis today Sir, please come up with present facts and figures asap as Money matters a lot and depositors are pretty bad in this Situation

  4. Only punishing the culprits and giving empty promise do not resolve the issue. We want some positive response from the management of the bank when our hard earned money will be paid back, please do something. It is my humble request.

  5. This is regarding my old parents they have deposited 100% of retirement amount in the bank. They were depended on the interest amount on their FD, and no other source also in the same issue they are always sick if any thing happens who is bleddy held responsible will the RBI or bank staff give their lives back.
    When will this issue get solved pls consider the lives of all the senior citizens and oblige.

  6. Good article to sum up all the problems happened in the bank. We believe, banking system is governed by RBI. We see that RBI is conducted Bi-Annual and Annual auditing. Why RBI failed to catch fraud occurred in bank.

  7. It has happened over a year. By this time all the depositors are well aware of fraud happened, except real figure of what extent depositors have been cheated. Here reproducing the known facts in journalism expertise style is no doubt good. But Mr Harish should have found out about correct figure of Deposits amount, is it full deposits have been given loan? Upto what figure collateral security available? How many crores security deposits actually made? If such type of bothering unknown factors if Mr Harish have digged out being a journalist, it would have given some confidence to depositors. Untill Audit completed, real figure will not be known of course, but rough estimated figures only journalist can collect. Article is like Postmortem.

  8. Looks like as a society our ethics are deteriorating and we have failed in maintaining ethical behaviour in our daily business.SGRCS incident clearly demonstrates that people are ready to cheat fellow human beings if given an opportunity. Factual errors pointed out by one of the respondents Prashanth B N earlier are no way contributing to the huge problem gullible investors are facing.It is only confusing the common man rather. Through this article, Harish has atleast tried to bring the core issue of injustice and loopholes in our current system to limelight.I am not sure whether DICGC insurance cover of Rs 5 lac is applicable to Cooperative Banks also.

  9. I have a special child and had saved money in the bank for his welfare and treatment. Now, I am in a soup. I am a freelancer with no fixed source of income.

    I tried to meet the administrator and present a request. The staff almost shooed me out saying it is not a life threatening situation. Also, I was told the Administrator will not entertain any queries about these aspects.

    Where will my son who cannot speak and behind in his age go, when the hard earned savings for him is not accessible.

    I think the hard lesson to all of us is that we should boycott all Coop Banks and that RBI, Government of both Centre and State are least bothered about the Coop Banks. Coop Banks are only for loans and not deposits.

    The accounts signed by Chartered Accountants is not worth the paper it is signed on. The CAs who have failed so many in their fiduciary responsibility should be dealt with for the criminal acts that they have committed.

    • Dear Sir
      The administrator has no powers to permit any withdrawal except as allowed by RBI which is in the public domain. I do understand your situation and have all sympathies but as an official working under RCS i am bound by the rules.

  10. The saddest part of this whole scam is the plight of the depositors who are mostly seniors & middle class who’ve kept all their hard-earned money trusting this bank. It is very clear that the management & staff together looted without an iota of conscience. I think proper check should be done in the houses of relatives & friends of these scamsters who would’ve hidden the loot there. Property purchased or built in their relatives names should also be checked. Who knows benami names & properties would come tumbling out

  11. Last comment is not mine. Request moderator to remove that or point out it’s from a different Prashanth. Anyway I have clarified.. As for others criticizing be they have a right to.

    There were many factual inconsistencies and I pointed out one. The main point I wished to make was the slant in the write up.

    Now coming to inconsistencies previous Administrator never talked of liquidation and the current one in his talk is always pointing to it. The current administrator had committed to a February End or March first week date for competing his task of recasting balance sheet after talking and reconciliation of all accounts but in a recent circular has gone back to his old and tested formula of such a big fraud has happened and blah blah blah. After nearly 4 months on the job of he is unable to commit to a date it needs to be criticized.

    Next there is the question of recovery. Depositors used to question the previous administrator for slow recovery. Now it has come to a standstill with vague reasons being given out. This after even the Court has stepped in and asked the bank to accept money via a separate account. Why has Harish not raked up this issue?

    Finally in a beleaguered bank like ours Administrator needs to work closely with the staff and make things happen. Here they are always at loggerheads. Each side is now wary of the other. How good is it for the bank? As the head of the bank the Administrator needs to sort this out and yet he lets the situation fester. Why does Harish not point this out. I have added a few things now and I leave it here.

    Prashanth BN

    • Mr Prashant don’t let your imagination run riot before posting utter falsehoods of what i have not said. I don’t want to get into a debate on this. However you are entitled to your opinion on my working but not spread falsehoods which i have not said. If you can have a better administrator please look for one and i will be happy to make way. Loop

      • Dear Mr Ashokan,

        We are waiting more than a year to get our hard earned money. Kindly let me know, is there any possibility guru Ragavendra can take over my home loan from union bank of India amount equivalent to FD deposited ..

        If yes, kindly let me know the process to initiate and close this at least… will a great help..

  12. Day by day hopes are diminishing. Scaring much more about the future. How to lead life without money?

    • In spite of such a plunder and pilferage in the Bank there is hope of survival. People at power and intelligent people who have knowledge and skill to bail out from such situation can/will act to bring some hope. Hope is the best thing because things happen even from hopeless situation. However our efforts are required in keeping up the pressure on those who can bring hope against hope.

  13. The article is well explained fact report of the Sri Guru Raghavendra Bank. The depositors are maximum of senior citizens, who deposited the life time hard earned money for the peaceful life. But their dream has not fulfilled. Now government is trying to privatise the banks by showing the controlling authorities. Since beginning Reserve Bank is there, with their supervision only, all the banks have to run. How they are closed their eyes when this bank made such big fraud.? Registrar of co operative societies to look after societies, why the fraud has not come to their knowledge? The chartered accountants giving all true green figures since two decades, how it was accepted? After the fraud came to light, local MP, MLAs appeared, convinced depositors, only to protect the bank management body, no stones moved for the interest of depositors. No. of admins changed. Only to give news of audit to be completed, assessment under progress, property will be auctioned. Just mere sentences will not be helpful. As the depositors, senior citizens, we request the authority, please understand the difficulty of senior citizens and settle the deposited amounts immediately. Many are died with this worry, many are suffering with serious illness, many are with no money for living. Situations are becoming bad. Immediate action on this is very much needed.

  14. The country indeed seems like a banana republic where the general public of fine only until something or the other hits them, after which there is no way out. Though the current dispensation has come with a promise of stopping corruption one can’t see any change at the ground level.
    I believe it’s also a litmus test for the new MLA Tejaswi Surya on how he can ensure justice and will reveal his character.
    Thanks Pgurus for covering this.
    -Also an affected middle class citizen.

  15. Details of the fraud and plight of depositors of Guru Raghavendra Bank (SGRSBN) are well narrated.

    The fraudsters who include erstwhile management and staff of the bank (who are out on bail), the auditors who audited the bank 2019 and prior, the Karnataka RCS and the RBI employees who inspected the bank, the defaulter borrowers, the software vendor that supported the fraud, the politicians who supported the fraud – all should be subjected to CBI investigation and sent behind bars.

    ED must liquidate the attached assets soon and return the money of depositors.

    Recovery of loans must be expedited. Recasted balance sheet and Audit report must be published soon.

    The bank should be merged or acquired by another stronger organization and EOI must be invited from investors to bail out depositors as in case of PMC bank.

  16. Good work by Mr Harish.
    Suggest you put up the names of the erstwhile Board of Directors (Promoters, Individual and Nominees) too and the Management Team that was at the helm. This is to ensure that the public has nothing to do with their involvements in future.

    What a country we have become!
    People rob using God’s name, share the loot with God by giving a share to the temples etc
    A criminal does not stop being criminal.
    God does not forgive. Don’t believe fools who tell you so.
    Your karma is decided once you have become a criminal.

  17. This write-up is biased and superficial with absolutely no substance. Let me just pick one hole. Muralidhar Arkady was suspended along with 3 others saying they had indulged in corruption. The 3 were arrested and not Arkady. First question is why? Second question is why was he then suspended along with other 3 and a claim was made that all 4 were caught indulging in corruption. Questions and more questions will arise. This is what happens when a write up is biased since interview was done with a biased despositor !!

    • Why are you so Harsh and behind Harish making Immature comments for every comment of his when he is doing for welfare of all the depositors [includes you]. Please don’t put down us all who are in vain and pain.
      thief is thief whether he steals golden spoon or steel spoon.
      The act and its intention are important not whether arrested or not, all are under suspension.
      All staff mentioned by him are suspended for some or other acts of misconduct allegedly committed by them. For the sake criticize you are defending staff who are fraudsters and cheaters and not having any gratitude to bank and it’s depositors [you are one amongst us and looks weird you support such Frauds].

      Looking forward your Moral support to Harish and team to get back our HEM at the earliest, all hands together we have to fight against this scam and scamsters to get Justice as the whole System is corrupt and if we fight each other with no cohesion we are the only losers.

    • You are a good critic, your opinion can be incorporated in future articles. I guess the author has written this article to provide the opportunity for operational risk in cooperative banks, by a touch upon the areas of fraud.

      Coming to your point, the details you mentioned in your comment is very trivial when we compare your comment to the big picture. If the author starts writing points you claimed missing will completely dilute the objective of the article. Besides making it more complex to understand by a common man and other cooperative bank depositors.

      However, I guess the author will write many such articles taking each of the loop pole marketing the incidence.

      I also like to point out, that your comment of bias opinion on a background document doesn’t fit in good taste. The author is a deposit is, victim, suffering from a health-related issue and an experienced journalist.

    • I am a SHAREHOLDER trying to brainwash depositors. I am not alone, we are hiding among all depositors trying to brainwash & confuse them.

      • As a shareholder, ie part owner of the bank, you are partially responsible for the state of affairs. You are also responsible to the Depositors. Maybe you are trying to pass the buck.
        What were you doing all this time !

    • The first person was suspended as he had joined the bank by creating a fake certificate of his previous employer (bank) from where he was dismissed and not for corruption. Then five staff were suspended because they failed to deposit banks cash in crores which was withdrawn from banks and siphoned it. Arrests were made by police based on the complaint lodged against the five staff. Hence the reason of corruption is not true.


Please enter your comment!
Please enter your name here