₹42-crore loan scam alleged at Bengaluru Cooperative Bank; Chairman’s family under scanner

Complaint filed against Soundarya Cooperative Bank chairman P. Manjappa over alleged repeated illegal loans, RBI guideline violations, and misuse of depositors’ money.

Bengaluru has witnessed yet another major controversy in the cooperative banking sector, with serious allegations of financial irregularities emerging at Soundarya Cooperative Bank. A formal complaint has been filed against the bank’s chairman, P. Manjappa, accusing him and his family members of large-scale misuse of bank funds and repeated violations of banking regulations.

The bank is located on Nagasandra Main Road in the Havanuru locality of the city. The complaint has been submitted to the Bengaluru Police Commissioner by Shankaregouda, a member of the cooperative bank. According to the complaint, Manjappa’s family members dominate the bank’s administration, with five members of the same family serving on the board of directors.

The core allegation revolves around illegal loan sanctions. It is alleged that loans were repeatedly taken using the same property as collateral. Despite not repaying earlier loans, fresh loans were sanctioned on identical documents, in clear violation of Reserve Bank of India (RBI) guidelines. The complainant claims that Manjappa’s family alone has availed loans worth ₹42 crore from the bank.

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Further details reveal that nearly 23% of the bank’s total loan portfolio has allegedly been cornered by the chairman’s family members. Investigations have found that institutions owned by the chairman’s family owe more than ₹33 crore to the bank.

A particularly serious allegation involves vice-president Sunitha, Manjappa’s wife. She reportedly applied for a ₹14 crore loan but was sanctioned ₹19 crore. It has also been established that she repeatedly secured loans against the same property. Additionally, loans were allegedly granted in excess of the actual value of the mortgaged assets.

These irregularities came to light during an inquiry conducted by the Joint Registrar of Cooperative Societies. The investigation confirmed multiple violations and submitted a detailed report. However, despite the findings, no action has reportedly been initiated by the Karnataka State Souharda Sahakari authorities.

The issue had first surfaced in November 2025, when bank members approached the Cooperative Department with a complaint against the chairman. With concerns mounting over possible misuse of funds deposited by ordinary investors, the matter has now reached the Police Commissioner, seeking criminal investigation and accountability.