Karnala Bank scam: ED restitutes assets worth ₹386 crore to aid depositors

Properties in Raigad attached under PMLA returned by ED to benefit over five lakh depositors defrauded by Karnala Bank's ex-chairman and officials using fake loans

The Directorate of Enforcement (ED) has restituted immovable properties worth Rs 386 crore to the Competent Authority under the Maharashtra Protection of Interest of Depositors (MPID) Act for the benefit of depositors of the defunct Karnala Nagari Sahakari Bank Ltd, Panvel.

 

According to the ED, the assets, located across Raigad district in Maharashtra, were provisionally attached under Section 5 of the Prevention of Money Laundering Act (PMLA) following investigations into a Rs 560 crore fraud.

 

The scam involved the bank’s former chairman, Vivekanand Shankar Patil, who, along with other officials, allegedly created 63 bogus loan accounts using forged documents to siphon off funds into entities controlled by him and his relatives.

 

The ED initiated its probe based on an FIR registered by the Economic Offences Wing (EOW), CID Pune, on February 17, 2020. The PMLA chargesheet accuses the accused of criminal conspiracy, forgery, and cheating in violation of Reserve Bank of India norms. 

 

The immovable properties were attached through two orders issued on August 17, 2021, and October 12, 2023. A prosecution complaint was also filed before the Special PMLA Court on August 12, 2021, and the trial is currently underway.

 

In a major relief to depositors, the PMLA Special Court in Mumbai passed an order on July 22, 2025, allowing the release and auction of the attached properties — including the Karnala Sports Academy in Panvel and land at Posari, Raigad. The restitution application was filed by the liquidator appointed by the Reserve Bank of India under Section 8(8) of PMLA, to which the ED consented.

 

Over five lakh depositors had placed their hard-earned savings — totalling Rs 553 crore — in the bank before the fraud came to light. The ED’s action is aimed at enabling partial recovery for affected depositors.

 

In a statement, the ED said it expedited the process in view of the scale of public loss and in the larger interest of depositors.