VACB questions Sree Narayana Dharma Paripalana (SNDP) Yogam general secretary Vellappally Natesan in the microfinance fraud case

The Vigilance and Anti-Corruption Bureau (VACB) on Wednesday questioned Sree Narayana Dharma Paripalana (SNDP) Yogam general secretary Vellappally Natesan as part of its High Court-ordered probe into a microfinance fraud. The interrogation reportedly took place at his residence in Alappuzha.

The VACB had indicted five people, including Mr. Natesan, for conspiracy and financial fraud based on a complaint filed by the late Chief Minister V.S. Achuthanandan in 2016 and booked them under the relevant provisions of the Prevention of Corruption Act and the Indian Penal Code.

The prosecution’s case was that the suspects had fraudulently misappropriated large sums of money borrowed from banks through the Kerala State Backwards Classes Development Corporation on the pretext of providing seed money to economically challenged SNDP Union members, mostly women, to start household-level enterprises such as soap, pickle, jam and incense stick making.

The prosecution argued that the Yogam functionaries disbursed low-interest loans to self-help groups composed mostly of women at extortionate rates, pocketing the illegal proceeds. The accused also allegedly obtained loans in their own names using fictitious identities and fake addresses. 

Moreover, the accused allegedly failed to remit the loan repayments from self-groups in the banks concerned.

The widespread fraud came to light when loanees, an estimated 5,000 families, faced revenue recovery proceedings initiated by banks despite having redeemed their loans through timely mortgage payments to SNDP union office-bearers in charge of the microfinance scheme.

The VACB case was that the suspects formed a cartel to financially enrich themselves at the expense of the State and the scheme’s economically underprivileged subscribers. It pegged the estimated loss to the public exchequer at ₹15 crore.

Achuthanandan took up the cause of the “swindled” families and petitioned the then United Democratic Front government. He threatened to move the High Court if the government failed to register a case. He raised the issue repeatedly in the Assembly as the Leader of the Opposition and urged the government to insulate the “deceived” families from revenue recovery proceedings. Subsequently, the Crime Branch registered a case in 2016.

 The investigation stalled under the Left Democratic Front government. The government also removed investigating officer P. Sasidharan. In July 2025, the High Court ordered the government to reinstate Mr. Sasidharan and expedite the filing of the charge sheet.

The accused also included former managing directors of the Kerala State Backwards Classes Development Corporation Najeeb and Dileep Kumar and microfinance chief coordinator K.K. Maheshan and SNDP union president M.N. Soman.

Mr. Natesan has since maintained that he was innocent of any wrongdoing and that he was the victim of a political witch-hunt prosecuted by the UDF regime.

He told reporters in Alappuzha that earlier investigations had absolved him of wrongdoing and he would prove his innocence in court and before the government.