Fresh allegations of property fraud have emerged in the case of Sri Guru Raghavendra Sahakara Bank Niyamitha in Bengaluru, with 127 residential plots allegedly mortgaged after being sold to individual buyers.
The properties are part of Sri Shankara Layout in Kambipura village, Kengeri hobli. The Bangalore Development Authority-approved layout has a registered residents’ welfare association.
According to documents reviewed by The Times of India, the developers executed absolute sale deeds in favour of 127 buyers between 2011 and 2015. However, the layout and its plots were subsequently shown as collateral for loans from the bank in 2019.
In one case, the outstanding amount linked to the mortgaged property has reached Rs 961 crore, although its collateral value remains unknown.
Buyers allege plots were mortgaged after sale
In a letter dated July 16, 2026, the layout owners’ welfare association informed the bank administrator about the mortgages.
The association referred to two mortgage deeds registered on October 31, 2019, and two rectification deeds dated November 28, 2019. It alleged that the entire layout, including the 127 plots already sold, was offered as collateral.
The association questioned how the bank accepted the properties as security when registered sale deeds had already transferred ownership to individual buyers.
It also alleged criminal breach of trust by the developers, reportedly in connivance with bank officials at the time.
The association urged the administrator not to initiate recovery proceedings or take other steps that could affect the buyers’ ownership rights and physical possession of their plots.
Outstanding loan amount reaches Rs 961 crore
A notice issued by the bank to the layout’s developers in January 2026 stated that loans worth Rs 739.87 crore had been raised by mortgaging the property to various persons.
The outstanding amount had increased to Rs 961 crore after accounting for interest, according to the notice.
Bank officials told The Times of India that similar irregularities had emerged in around 10 to 15 property mortgage cases.
The officials alleged that unsecured loans were attached to mortgaged properties to bypass audit deficiencies. These accounts were described as ‘rollover accounts’.
According to one senior bank official, the original loan recipients may have received Rs 10 crore to Rs 12 crore, while the remaining amounts were disbursed to other individuals and companies.
In the Sri Shankara Layout case, 23 people apart from the original loan recipients allegedly received funds.
Bank examining ownership and mortgage records
Bank officials said they would establish whether the Sri Shankara Layout plots were sold before or after the land was mortgaged in 2019.
They stated that properties sold before the mortgage dates could not be included in the recovery process. Individual plot owners have been submitting their documents to the bank for examination.
The bank reportedly lacks accurate information about the value of several mortgaged properties across Bengaluru and other locations. These properties cover an estimated 45 to 50 acres, with the farthest identified property located in Chintamani, Kolar.
The allegations have added another layer to the bank’s ongoing financial crisis, which left hundreds of depositors facing losses after it collapsed more than five years ago. The ownership claims, loan transactions and alleged involvement of bank officials remain subject to examination.
