Vashista Coop Defaults to Depositors: Bengaluru Police issue lookout notice, seek audit into society’s books

The Bengaluru City Police on Thursday issued lookout notices on Sri Vashista Credit Souhardha Sahakari Limited’s top management personnel after 36 depositors complained of default of their money.

They have alleged the society owes them Rs 4.7 crore in both deposits and interests. The Hanumanthanagar police, who have registered an FIR, have also alerted airports with passport numbers of key management personnel KN Venkatanarayana and Krishna Prasad.

The society, located in Hanumanthanagar, has 3998 members, and about half of them have deposited their money. About 350 members have deposits Rs 1 lakh and above. While some received interest on their deposits up to November 2020, there are also some who got up to February 21.


The Bengaluru South division police, who are investigating under DCP (South) Harish Pandey, have sought a detailed audit report about the financial affairs of the society. They have also asked assistance from the Cooperation department’s auditors to figure if there had been any discrepancies.

The society has been fighting hard times after a series of defaults at Sri Gururaghavendra Cooperative Bank led to a steep fall in depositors’ faith in some cooperative lending institutions. The questionable lending practices at Sri Gururaghavendra Coop Bank only exacerbated the crisis of confidence.

Sri Vashista Society’s chief executive was not reachable for a comment. One official, however, said it was a series of defaults by borrowers, many of them hit by the Covid-19 pandemic that has pushed the society into the present situation.

The society under investigation has been registered under the Karnataka Souharda Sahakari Act, 1997, and regulated by the Karnataka State Souharda Federal Cooperative Ltd. The RBI does not oversee its books since it is neither a bank nor an NBFC, an official said.

The cooperation department’s website rates it among the Group "A" Souharda Cooperatives with Rs.25 crore plus in working capital / turnover. The auditors at the Federal Cooperative have assessed the NPAs at Rs 120 crore, official sources said.

The Police said complainants include people who sought premature refund of their fixed deposits as well as who did not get their interest credits on time.

A Vashista official said the crisis of confidence arising from the Sri Gururaghavendra Bank’s mess led to a run on deposits, and they don’t have enough money to redeem all bonds as much of them have been borrowed by members.

Large sections of citizens park their savings with cooperative institutions as they offer high rates of interest on deposits compared to public sector banks.