ED Seeks Records of Kangra Bank Loan Waiver Scheme; BJP Alleges Favoritism Toward Congress Leaders

Central agency launches preliminary probe after NABARD report highlights irregularities

The Enforcement Directorate (ED) has sought records of loan waivers granted under the One-Time Settlement (OTS) scheme of Kangra Central Cooperative (KCC) Bank Ltd., initiating a preliminary probe into alleged financial fraud.

The inquiry follows the Himachal Pradesh government’s September 12 decision to suspend the bank’s entire 20-member board of directors after a report from the National Bank for Agriculture and Rural Development (NABARD) flagged serious financial irregularities and administrative failures.

According to NABARD’s inspection report dated March 31, 2024—submitted to the state government on March 27, 2025—the bank reported asset erosion of ₹767.45 crore, provisioning shortfalls of ₹11.34 crore, and a sharp increase in stressed loans. Gross Non-Performing Assets (NPAs) stood at 23.45%, while net NPAs were 8.81%, far exceeding the permissible limit of 5%.

The report also cited unauthorized lending, with 1,090 loans sanctioned outside the bank’s operational area—80% of which turned into NPAs. It flagged weaknesses in Know Your Customer (KYC) and anti-money laundering protocols, misclassification of loans, delays in fraud reporting, and operational lapses that led to rejection of government grant claims worth ₹22.30 crore.

During the inspection, fresh fraud worth ₹8.64 crore was detected, while 241 older fraud cases involving ₹20.99 crore remain unresolved.

Under the OTS scheme, the bank settled 5,461 NPA cases linked to loans worth ₹198.37 crore. Of this, ₹185.38 crore was waived while borrowers repaid ₹112.12 crore. In 4,420 fully closed cases, ₹122.15 crore was written off.

The board also reinstated some employees previously dismissed for negligence, raising further questions about management decisions.

BJP spokespersons Sanjay Sharma and Vishw Chaksu alleged that the bank’s management used the OTS scheme to favor Congress leaders by waiving their loans. They claimed that several current and former Congress MLAs benefited from the settlement process, calling it tantamount to corruption.

With the ED now scrutinizing the waivers, political observers believe the investigation could have wide-ranging implications in the hill state, potentially bringing Congress leaders and some bureaucrats under the scanner.

Gross NPAs at 23.45%
NABARD’s March 31, 2024 inspection report, submitted to the state government in March 2025, highlighted asset erosion of ₹767.45 crore, provisioning shortfalls of ₹11.34 crore, and a sharp rise in stressed loans. The bank’s gross NPAs stood at 23.45% and net NPAs at 8.81%, both significantly above the permissible 5% threshold. A total of 1,090 loans were issued outside the bank’s operational area, with 80% turning into NPAs.