Global Fraud Footprint

Balancing the benefits and risks of member-owned credit cooperatives

Credit cooperative societies across the developing world have helped local communities gain vital access to financial systems. But this access comes with a downside. Fraud and other financial vulnerabilities can put members at risk. This is where fraud examiners step in and help protect these cooperatives against such risks.

In late 2021, India’s Enforcement Directorate, a law enforcement agency focused on economic crimes, arrested two people in connection to a scam at the Navjeevan Credit Co-operative Society that diverted funds out of the financial institution and into the pockets of its chairman and relatives.

The chairman and his accomplices had allegedly opened 200 branches of the credit cooperative, luring depositors with promises of unrealistic returns on their investment. The perpetrators then diverted depositors’ money to entities controlled by them. Board members were also later accused of taking interest-free advances from the Navjeevan Credit Co-operative Society, one of several such institutions set up to help facilitate financial transactions in the local community. (See “2 arrested in Navjeevan Credit Co-operative Society scam case,” The Statesman, Dec. 12, 2021; “Navjeevan society scam: SOG arrests 2,” by The Times of India, May 24, 2023; and “Credit Cooperative Society,” by Dinesh Mishra, Legal Service India E-Journal.) 

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