Police on the lookout for 10 others, including directors, in the case. Ch.V. Subba Rao, a director of the society in 2007, in collusion with the board of directors had sanctioned a loan of Rs. 1.5 crore to one of its director’s P.V. Nagamalleswara Rao.
Diversion of funds and irregularities in the sanction of loans have led to the arrest of four employees of a cooperative credit society. Among them two are directors. The police are on the lookout for 10 others including directors and former directors.
Care Mutually Aided Co-operative Credit Society, registered under the AP Mutually Aided Co-operative Societies Act, 1995, has its registered office at Rednam Gardens at Old Jail Road. The society accepts money from its members in the form of fixed deposits, cumulative deposits, recurring, savings bank and daily deposits. There were about 400 members and principal amount was estimated to be of the order of Rs.7 crore, Deputy Commissioner of Police (Law and Order) M. Srinivasulu told the media here on Monday.
President M.S.N. Reddy, vice-president P. Ram Moahn Rao, vice-president P. Mallikarjuna Rao and four directors P.V. Nagamalleswara Rao, Ch. Vijayalakshmi, M. Geethalakshmi, and R. Chandrakanth were on the board of directors of the society. Mr. Srinivasulu said that some of the members had approached Police Commissioner B. Shivadhar Reddy and brought the issue to his notice.No surety
During the investigation, it was found that Ch.V. Subba Rao, a director of the society in 2007, in collusion with the board of directors had sanctioned a loan of Rs. 1.5 crore to one of its director’s P.V. Nagamalleswara Rao without any surety or mortgage of property. He failed to repay the interest or principal amount and a financial crisis started in the society and in course of time, repayment of amount to members on maturity was delayed.
Mr. Srinivasulu said that one of the directors had utilised Rs.3.5 crore for his personal use without informing the members. Some of the staff members of the society colluded with the directors and floated a construction company and diverted Rs.95 lakh into it.
Two Town (Maharanipeta Zone) Inspector R. Mallikarjuna Rao and his team arrested the directors Nagamalleswara Rao and R. Chandrakanth, accountant R. Satish and junior assistant Ch.R.V.S.S. Prasad on Sunday.
Assistant Commissioner of Police D.N. Mahesh was present.