Fresh allegations of property fraud have emerged in connection with Sri Guru Raghavendra Sahakara Bank Niyamitha in Bengaluru, which collapsed more than five years ago, leaving hundreds of depositors facing financial losses. The latest case involves 127 residential plots in a Bangalore Development Authority (BDA)-approved layout that were allegedly mortgaged to the bank even after being sold to individual buyers.
The properties are part of Sri Shankara Layout in Kambipura village, Kengeri hobli, south Bengaluru. According to documents reviewed by The Times of India, the developers had executed absolute sale deeds in favour of 127 individuals between 2011 and 2015. However, the entire layout, including these plots, was subsequently shown as collateral security against loans obtained from the cooperative bank in 2019.
The layout has a registered residents’ welfare association, whose members said they became aware of the mortgage only recently. In a letter dated July 16, 2026, the association informed the bank administrator that the plots had already been legally transferred to individual buyers through registered sale deeds before the mortgage documents were executed.
The association questioned how the bank accepted properties as collateral when ownership had already been transferred to the buyers. It also alleged criminal breach of trust by the developers, reportedly in connivance with officials associated with the bank at the time. The residents have urged the bank administrator not to initiate recovery proceedings or take any action that could affect their ownership rights and physical possession of the plots.
Loan Exposure Estimated at ₹961 Crore
The financial exposure linked to the mortgaged properties is substantial. A notice issued by the bank to the layout’s developers in January 2026 stated that loans amounting to ₹739.87 crore had been raised by mortgaging the property to various individuals. After adding interest, the outstanding amount reportedly increased to ₹961 crore.
However, bank officials have acknowledged that accurate details regarding the value of the mortgaged properties are not available. The properties involved in the alleged transactions are spread across Bengaluru and other locations, covering approximately 45 to 50 acres. One of the properties is located in Chintamani, Kolar district.
The bank’s records and the actual value of the collateral are therefore yet to be fully established, making the recovery process more complicated.
Allegations of Rollover Loan Accounts
Bank officials, speaking anonymously to The Times of India, indicated that irregularities may have occurred in 10 to 15 property mortgage cases. According to them, unsecured loans were allegedly linked to mortgaged properties to avoid audit-related discrepancies.
These accounts were reportedly classified as rollover accounts. Under this arrangement, the original borrower may have received only ₹10 crore to ₹12 crore, while the remaining loan funds were allegedly disbursed to other individuals and entities.
In the Sri Shankara Layout case, 23 individuals apart from the original loan recipients reportedly received funds. The beneficiaries included both individuals and companies.
Bank Reviewing Ownership and Mortgage Records
Bank officials have stated that they will examine the transaction records to establish whether the plots in Sri Shankara Layout were sold before or after the mortgage was registered in 2019. They have indicated that properties sold before the mortgage dates cannot be included in the bank’s recovery proceedings.
The plot owners have been submitting their individual ownership documents to the bank for verification.
The case highlights concerns over property title verification, mortgage registration and due diligence in real estate transactions. It also raises questions about the protection available to homebuyers when properties already transferred through registered sale deeds are subsequently used as collateral for large loans. The bank’s review of ownership records and mortgage documents will be important in determining the rights of the affected buyers and the extent of the alleged financial irregularities.
