Irregularities found in loan disbursal by Irinjalakuda Urban Co-operative Bank

The Fraud Identification Committee (FIC) has found lapses on the part of the former administrative committee and officials of the Irinjalakuda Town Urban Co-operative Bank in the sanctioning of loans.

Show-cause notices have been issued to members of the administrative committee and the officials concerned during the period covered by the files examined by the committee.

The bank is undergoing a forensic audit following the detection of serious financial irregularities and losses in several loan accounts. The FIC was constituted by the RBI-appointed administrator and advisory committee in accordance with the bank’s Fraud Risk Management Policy.

The committee examined the findings of the forensic audits along with records maintained at the branches. It identified serious operational lapses, failures in internal control mechanisms and shortcomings in supervision, prompting the issuance of notices.

The notices seek explanations on allegations of serious negligence, deficiencies in pre-sanction appraisal of loans, inadequate post-disbursement monitoring, failure to verify the end-use of loan amounts and lapses that allegedly enabled irregularities in loan accounts.

The former committee members and officials concerned have been directed to submit written explanations, along with supporting evidence, within 21 days. The notices warn that legal action will be initiated if replies are not received within the stipulated period.

The more than 100-year-old Irinjalakuda Town Urban Co-operative Bank has been grappling with a financial crisis since 2019, when its non-performing assets (NPAs) began mounting sharply. On July 31, 2025, the Reserve Bank of India superseded the bank’s board of directors and appointed an administrator to take charge of its affairs. More than 7,000 depositors are now left in uncertainty, unable to access their life savings as the bank continues to be under RBI-appointed administration.