A major gold loan fraud has been uncovered at the Primary Agricultural Cooperative Credit Society in Aralvaimozhy, Kanniyakumari district, where fake jewellery was allegedly used to obtain loans worth ₹2.65 crore.
The Economic Offences Wing has arrested one accused, identified as clerk Muthu Krishnan, while six others remain absconding.
Scam Allegedly Ran From 2017 to 2023
According to investigators, the fraud was carried out over six years between 2017 and 2023.
During this period, fake or imitation jewellery was allegedly pledged as genuine gold to secure multiple loans from the cooperative society.
Police suspect that several loans were approved without proper verification, raising concerns about internal control failures and possible collusion.
Former Secretary and Others Named
The case also names former secretary X. Sahaya Thilagaraj and several others suspected of involvement in the loan approval and record manipulation process.
Investigators are examining whether staff, former officials and external facilitators worked together to process fraudulent loan applications.
Audit Exposes Suspicious Loan Records
The case came to light after a retired Deputy Registrar of Cooperative Societies filed a complaint.
A detailed audit of the society’s records revealed suspicious transactions, repeated documentation issues and inconsistencies in gold loan files.
The findings were then escalated to the Economic Offences Wing, which registered a criminal case.
Similar Ornaments Found Across Loan Files
Investigators reportedly found repeated use of similar ornaments across multiple loan records.
There are also suspicions of manipulation in valuation reports and certification processes.
Officials are examining how fake jewellery entered the loan system and who certified it as genuine gold.
Wider Network Under Probe
The EOW is questioning arrested clerk Muthu Krishnan and reviewing his financial records, digital devices and transaction history.
Multiple police teams are searching for the remaining accused.
Authorities believe the case may reveal a wider pattern of cooperative banking irregularities and weak oversight.
Why Audits Are Critical in Gold Loan Systems
Gold loan frauds expose the need for strict asset verification, independent valuation, dual custody controls and regular loan-file reviews.
Professional auditing services in india can help financial institutions detect irregularities, verify collateral records and strengthen internal controls before frauds become systemic.
Shunyatax Global Insight
At Shunyatax Global, we believe financial institutions must protect public trust through regular audits, transparent records and strong verification systems. The Kanniyakumari case shows how weak controls can allow fraud to continue for years.
For more updates on banking fraud, compliance, taxation and financial governance, visit Shunyatax.in.