In a significant milestone for financial crime enforcement, the Enforcement Directorate (ED) has secured a conviction in a Hyderabad bank fraud and money laundering case involving businessman L. Srinivas Goud. The Metropolitan Sessions Judge (MSJ) Court, Nampally, Hyderabad, held him guilty under Section 3 read with Section 4 of the Prevention of Money Laundering Act (PMLA), 2002.

The Court awarded five years of rigorous imprisonment and imposed a fine of ₹25,000 on Goud. A similar penalty was imposed on his firm, Mallika Inn Bar and Restaurant, which the Court found was used as a vehicle in the laundering of illicit funds.

The conviction, delivered on 24 November 2025, underscores a clear message from enforcement agencies and the judiciary: bank loan frauds backed by forgery and impersonation will be treated as serious economic offences carrying personal criminal liability.

PMLA Court Finds Forgery and Identity Fraud at the Core of the Scheme

The ED’s probe revealed that Goud, proprietor of Mallika Inn Bar and Restaurant, obtained a loan from Federal Bank using fraudulent documentation and identity impersonation. Property documents belonging to his mother were allegedly forged, including fabrication of her signature, and then submitted as collateral.

To complete the deception, an impersonator was produced before the bank during loan processing to pose as his mother and satisfy know-your-customer (KYC) checks. On the strength of these forged documents and misrepresentations, the bank sanctioned the loan under the category of housing finance and renovation of business infrastructure.

Investigators later established that the borrower had no genuine intention of using the funds for the declared purposes. The sanctioned amount was promptly diverted for unauthorised uses, severing any link between the loan and the purposes represented to the bank.

₹44.80 Lakh Classified as Proceeds of Crime

The ED concluded that the misused loan funds qualified as Proceeds of Crime under the PMLA framework. The fraudulent activity caused a confirmed financial loss of ₹44.80 lakh to the lending institution.

According to the agency, the pattern of diversion, layering and concealment reflected deliberate intent to defraud the bank rather than a mere case of default. This intent, combined with the use of forged property documents and impersonation, formed the basis of the money laundering charges that ultimately withstood judicial scrutiny.

The conviction therefore does not relate only to non-repayment of a bank loan but to a larger scheme to obtain funds dishonestly and disguise the resulting gains as legitimate.

Accused Evaded Proceedings, Arrested After Targeted Surveillance

Court records show that during the trial phase the ED examined multiple witnesses and produced documentary evidence to demonstrate the forgery, impersonation and subsequent diversion of funds. However, Goud repeatedly stayed away from court hearings.

His continued absence led to the issuance of several Non-Bailable Warrants (NBWs). Despite repeated attempts to trace him at previously known addresses, the accused remained unavailable and was effectively absconding.

Investigators eventually located him using a combination of electronic tracking and human intelligence. Following a week-long surveillance exercise, ED officers moved in during the early hours of 27 October 2025, arrested him and produced him before the Court. He was remanded to judicial custody, where he remained while the case progressed toward final judgment.

Bail Pleas Rejected Citing Conduct and Case Gravity

During his time in custody, Goud filed multiple bail applications. The Court, however, consistently refused relief, noting his conduct in evading summons, failing to cooperate with proceedings and the serious nature of offences involving forgery and money laundering.

The Court observed that releasing him on bail could risk obstruction of justice, including possible tampering with documents or influencing witnesses. The rejection of bail petitions cleared the way for an uninterrupted trial based on evidence placed by the ED.

Conviction Seen as a Strong Precedent in Loan Fraud Cases

After evaluating witness testimony, bank records, property documents and forensic analysis related to signatures and collateral papers, the MSJ Court concluded that the ED had proved its case beyond reasonable doubt. Goud was convicted for the offence of money laundering arising from the underlying fraud on the bank.

ED officials have described the ruling as a strong precedent for similar cases where borrowers use forged documents, stolen identities or sham business purposes to obtain credit and then launder the proceeds. They emphasise that such conduct is not only a civil or contractual breach with the bank but a criminal act capable of attracting PMLA prosecution.

The agency maintains that robust enforcement under PMLA is necessary to safeguard the stability of financial institutions and to deter would-be offenders who view bank borrowing as an easy channel to generate illicit gains.

What the Case Signals for Banks and Borrowers

For banks, the Hyderabad conviction is another reminder of the importance of stringent KYC procedures and collateral verification. The use of impersonators and forged property papers to slip past due diligence demonstrates how gaps in front-line verification can translate into long-term credit risk and regulatory exposure.

For borrowers, the case underlines that misusing loan funds and falsifying documents is not a low-risk gamble. With PMLA charges now routinely invoked in serious fraud cases, individuals found guilty face extended imprisonment, attachment of assets and long-term reputational damage.

Shunyatax Global Editorial Note

At Shunyatax Global, we track how financial crime enforcement, regulation and banking practices intersect with real-economy outcomes. The conviction of L. Srinivas Goud in Hyderabad illustrates how document forgery and seemingly routine loan misdeeds can escalate into full-fledged money laundering cases.

For more analysis on PMLA enforcement, banking sector risk, and economic governance in India and beyond, visit Shunyatax Global Services. Explore in-depth reporting, share our stories across #Finance, #Governance and #FinancialCrime, and stay informed on the evolving enforcement landscape.