Lapses found in loan disbursal at Irinjalakuda Town Urban Co-operative Bank
The Fraud Identification Committee issued show-cause notices to former officials and committee members following the detection of financial irregularities.
The Fraud Identification Committee (FIC) has identified lapses in the sanctioning of loans by the former administrative committee and officials of the Irinjalakuda Town Urban Co-operative Bank, according to The Hindu.
The committee issued show-cause notices to the officials and committee members involved during the period covered by the examined files. This follows a forensic audit conducted after serious financial irregularities and losses were detected in several loan accounts.
The FIC was formed by the administrator and advisory committee appointed by the Reserve Bank of India (RBI) under the bank’s Fraud Risk Management Policy. The committee reviewed forensic audit findings and branch records, identifying failures in internal controls, supervision, and operational processes.
The notices demand explanations regarding allegations of negligence, poor pre-sanction appraisal, insufficient monitoring after disbursement, and failure to verify how loan amounts were used. The former committee members and officials must provide written explanations and evidence within 21 days.
The bank has faced a financial crisis since 2019 when its non-performing assets began to rise sharply. On July 31, 2025, the RBI superseded the bank's board of directors and appointed an administrator.
The notices state that legal proceedings will begin if the required replies are not submitted within the given timeframe. Currently, more than 7,000 depositors are unable to access their savings while the bank remains under administration.