ED Attaches ₹2.08 Cr Assets in MP Loan Fraud

The Enforcement Directorate (ED) has provisionally attached 12 immovable properties worth about ₹2.08 crore in Ashta town of Sehore district, Madhya Pradesh, in connection with an alleged bank loan fraud involving two government self-employment schemes, the Pradhan Mantri Employment Generation Programme (PMEGP) and the Chief Minister Yuva Udyami Yojana (CMYUY).

According to the ED, the properties belong to businessman Manoj Parmar and his associates and have been attached under the Prevention of Money Laundering Act (PMLA), 2002. The money-laundering investigation is based on an FIR and subsequent chargesheet filed by the Central Bureau of Investigation (CBI), Bhopal, in a loan fraud case registered against Parmar, then Punjab National Bank (PNB) Ashta branch manager Mark Pius Karari, and others.

ED Action in the PMEGP–CMYUY Loan Fraud Case

The ED’s Bhopal Zonal Office has said that the 12 attached assets are located in and around Ashta, Sehore, and were allegedly acquired using funds diverted from loans meant for youth employment and small enterprise projects.

The agency’s provisional attachment order follows earlier search and investigation steps in the same case. Under PMLA, such attachments are aimed at preserving the suspected proceeds of crime while the money-laundering investigation and related trial continue. Final confiscation, if any, is subject to adjudication and judicial orders.

How 18 Government-Subsidised Loans Were Allegedly Misused

As per the CBI and ED case records, the alleged fraud dates back to 2016. Investigators contend that 18 loans totalling about ₹6.20 crore (with ₹6.01 crore actually disbursed) were sanctioned under PMEGP and CMYUY through the PNB Ashta branch.

The ED alleges that:

• The loans were taken in the names of 18 fictitious or bogus applicants.
• Forged documents, fabricated quotations and fake project reports were used to obtain sanction.
• Loan sanction conditions and internal bank rules were allegedly ignored or bypassed.
• Second-level approvals required for higher-value loans were not properly obtained.

Subsequent inspections by the lending bank reportedly found that no business units or industrial projects were actually set up at the addresses provided in the loan files. Several individuals in whose names loans had been sanctioned are said to have denied ever applying for credit or receiving any funds.

Diversion, Layering and Attached Properties

According to the ED’s findings so far, the loan amounts disbursed under the schemes were allegedly diverted soon after sanction into accounts of firms and entities controlled by Manoj Parmar and his close associates, rather than being used for genuine project expenditure.

The agency has stated that:

• Funds were moved between multiple linked firms and accounts to disguise their origin.
• Significant portions were allegedly withdrawn in cash.
• Parts of the money were used to buy immovable properties in and around Ashta in the names of Parmar and benami holders.

It is these properties that have now been provisionally attached. ED has described the pattern as a case of diversion and laundering of government-subsidised public funds intended for self-employment and small business, and has indicated that efforts to trace remaining assets and proceeds of crime are continuing.

Background of the Case and Human Angle

The loan fraud case itself was first taken up by the CBI, which registered an FIR and later filed a chargesheet alleging cheating, forgery, criminal conspiracy and corruption in connection with the sanction and use of the 18 loans.

Separately, media reports have noted that in late 2024, during an earlier phase of enforcement action in this matter, Manoj Parmar and his wife Neha were found dead in his office in Sehore some days after an ED search. The circumstances around their deaths are subject to separate legal and investigative processes, and no causal findings have been attributed to the current attachment order itself.

For investigators and policymakers, the case highlights both the systemic misuse of targeted government subsidy schemes and the personal and social fallout that can follow when regulatory and criminal proceedings escalate.

What This Means for Banks and Government Schemes

For banks and nodal agencies handling government-subsidised credit schemes such as PMEGP and CMYUY, the case underscores how design gaps and weak field controls can be exploited at scale.

Key control lessons emerging from the ED–CBI narrative include:

• Robust applicant verification – Schemes that rely on branch-level vetting and local recommendations need stronger identity checks, physical inspections and independent validation of project viability.
• Segregation of duties and approval thresholds – Bypassing second-level approvals or allowing individual branch officials excessive discretion raises the risk of collusion and abuse.
• Post-disbursal monitoring – Timely site visits, utilisation certificates and transaction reviews are critical to ensure that subsidised loans fund real enterprises rather than being diverted.
• Early-warning analytics – Clusters of loans in similar names, locations or sectors, routed through the same introducers or consultants, should trigger deeper review.

For ministries and state departments that sponsor such schemes, the case is a reminder that credit facilitation must go hand-in-hand with strong governance, audit and fraud management frameworks.

Shunyatax Global View – Subsidy Schemes, Loan Fraud & AML

At Shunyatax Global, the Manoj Parmar PMEGP–CMYUY case is a pointed example of how concessional credit and subsidy-linked programmes can be misused when:

• Front-end controls at the branch level are weak or inconsistently applied.
• Application and documentation processes rely heavily on paper and intermediaries.
• Post-sanction monitoring does not keep pace with the volume of beneficiaries.

For banks, state corporations and implementing agencies, we typically focus on three layers of defence:

1. Scheme-level risk mapping
   Identifying fraud and diversion scenarios specific to schemes like PMEGP, CMYUY and other subsidy-backed programmes, and building them into risk registers and SOPs.
2. Data-led screening and monitoring
   Using analytics on beneficiary data, sanction patterns and transaction trails to detect fictitious applicants, collusive clusters and unusual fund flows early.
3. Forensic-ready processes
   Ensuring documentation, audit trails and escalation mechanisms are strong enough to support timely forensic reviews, recovery actions and cooperation with agencies such as CBI and ED when red flags emerge.

Cases like this also have clear anti-money laundering (AML) implications. Lending institutions are expected to align internal policies with PMLA requirements, maintain high-quality records and be prepared to respond quickly to regulatory and investigative requests.

Shunyatax.in Loan Fraud & Compliance Advisory

If your organisation manages subsidy-linked credit schemes, MSME finance or government-backed lending programmes, the ED action in this case is a timely signal to reassess how fraud, diversion and AML risks are being controlled.

Shunyatax Global works with banks, NBFCs, state agencies and development finance institutions to:

• Map exposure to loan fraud and diversion in scheme-based and retail lending.
• Strengthen appraisal, documentation and post-disbursal monitoring frameworks.
• Design early-warning dashboards and investigative playbooks for high-risk accounts.
• Support regulatory engagement and enforcement responses, including PMLA-linked matters.

Visit Shunyatax Auditing Services to request a confidential review of your loan fraud and compliance posture, and to follow the Shunyatax News & Insights column for ongoing coverage of financial crime, cyber risk and regulatory developments.