Mangaluru: A massive MSME loan fraud has come to light at the State Bank of India (SBI), Mallikatte branch, where a former Relationship (SME) Manager along with 14 borrowers allegedly colluded to secure loans using misleading documents. The fraudulent activity, according to the bank, has caused a loss exceeding ₹10.47 crore.
Former RM accused of sanctioning loans without verification
The complaint was filed by Chief Manager Saurabh Kumar Verma, who took charge on 2 June 2025. He alleged that Abhishek Nanda, the bank’s former Relationship Manager who worked at the branch from 27 June 2022 to 20 November 2024, had sanctioned multiple MSME loans without carrying out mandatory field checks and document verification.
According to Verma, Nanda processed loan applications submitted by various individuals who claimed to operate diverse businesses, including electronics trading, solar rooftop equipment supply, plywood trading, arecanut trading, poultry feed production, supermarket operations, leather goods trading, household goods manufacturing, kitchenware supply, and hotel and restaurant management.
The loans were sanctioned despite several red flags, and the bank now claims that many of the enterprises either did not exist or were non-functional.
Details of borrowers and alleged fraudulent businesses
The complaint listed several borrowers who secured loans for purported business ventures:
- Rifad Mohammed, Sefia, and Mammed Ziam Nitte Hassan Adam – claimed to run electronics trading businesses
- Akshatha – secured a loan for a solar rooftop installation enterprise
- Anwar Hussain – received funding for a plywood trading unit
- Abbobakar and Muhiyuddin (A8) – availed a joint loan for arecanut trading
- Rashmitha – secured a loan for poultry feed production
- Heeba Hallema – claimed to operate a supermarket
- Aashraf Abbas Beary and Sushma – availed loans for leather bags and shoe trading
- Akbar Salam – obtained a loan for plywood and household goods manufacturing
- Raihanath K A – secured financing for a kitchenware business
- Mohammad Rafan – received a loan for hotel and restaurant management
According to the bank, none of these borrowers repaid their loan instalments as agreed, raising immediate suspicion regarding the legitimacy of the businesses for which funding was obtained.
Alleged collusion and financial misconduct
The complaint further alleges that the former Relationship Manager knowingly recommended loan sanctions despite being aware that several of the businesses were not operational or viable. He is accused of accepting financial benefits from the borrowers and facilitating the approval process.
The complainant asserted that all 15 individuals acted with a common intention to cheat the bank, thereby committing offences such as criminal breach of trust, cheating, and fraud. Their actions, the bank stated, resulted in a combined loss of ₹10,47,49,868 to the SBI Mallikatte branch.
Case registered; probe underway
Mangaluru Police have registered a case based on the complaint and initiated a detailed investigation. Authorities are expected to scrutinise financial transactions, verify the existence of the claimed businesses, and examine whether additional bank staff or intermediaries were involved.
Investigators will also assess whether forged documents or falsified financial statements were used to obtain the loans under the MSME category.
Growing concerns over MSME loan misuse
The incident has raised concerns over the misuse of MSME loan schemes and the vulnerability of financial institutions to internal-external collusion. Banking experts say that such cases underline the need for stronger verification protocols, periodic audits, and stricter monitoring of staff handling high-value loan portfolios.
In the wake of the complaint, SBI is expected to conduct an internal inquiry to identify systemic lapses and strengthen safeguards to prevent similar frauds in the future.
Conclusion
The alleged loan fraud at SBI’s Mallikatte branch highlights the potential risks associated with inadequate verification and internal collusion. With a loss of more than ₹10.47 crore at stake, investigators face the challenging task of uncovering the full extent of the conspiracy. As the case progresses, the findings may have broader implications for MSME lending practices and fraud-prevention measures across the banking sector.