ED Arrests Deepak Cables MD in ₹899 Crore Bank Fraud

Bengaluru-New Delhi: The Directorate of Enforcement (ED), Bengaluru Zonal Office, has arrested Karuturi Venkateshwara Rao under the provisions of the Prevention of Money Laundering Act (PMLA), 2002, in connection with a major bank fraud and money laundering case involving M/s Deepak Cables (India) Limited (DCIL) and its associates.

The arrest was carried out on June 2, 2026, following an extensive investigation into allegations that the company and its promoters defrauded a consortium of banks led by the State Bank of India (SBI) to the tune of approximately ₹899.35 crore.

According to the ED, the investigation originated from a First Information Report (FIR) registered by the Central Bureau of Investigation (CBI) against Deepak Cables India Limited, its Managing Director Karuturi Venkateshwara Rao, and other accused persons. The FIR alleged that the company secured substantial credit facilities from multiple banks through fraudulent means and subsequently diverted the loan funds for unauthorized purposes.

Investigators found that the company had allegedly submitted falsified financial statements and manipulated accounting records to obtain and continue availing bank loans. These misleading financial disclosures reportedly created an artificial picture of the company’s financial health, enabling it to secure higher levels of credit from banking institutions.

The ED’s probe further revealed a complex web of financial transactions involving multiple entities allegedly controlled by the accused. These entities were reportedly used to generate fictitious sales and purchases, engage in circular trading activities, and issue fake corporate guarantees. Such transactions were allegedly designed to inflate the company’s turnover figures, enhance drawing power from banks, and facilitate the evergreening of existing loans.

Officials stated that the proceeds generated from these activities were subsequently diverted through related companies and personal bank accounts linked to Karuturi Venkateshwara Rao and his associates. The movement of funds through multiple layers of transactions was allegedly intended to conceal the illicit origin of the money and integrate it into the formal financial system.

The investigation also uncovered evidence suggesting that substantial portions of the loan funds were transferred to related entities under the direct or indirect control of Rao without any legitimate business justification. The ED believes these transactions lacked commercial rationale and were executed primarily for the purpose of siphoning off bank funds.

Based on the material gathered during the investigation, the ED concluded that there were sufficient grounds to believe that Karuturi Venkateshwara Rao had knowingly participated in the generation, concealment, layering, and integration of proceeds of crime. The agency alleges that he used a network of bank accounts operated by various associated entities to facilitate the laundering of illegally obtained funds.

Consequently, Rao was arrested under Section 19 of the PMLA and produced before the Special Court in Bengaluru. The court granted the Enforcement Directorate ten days of custody for further interrogation and investigation.

This is not the first major action taken by the ED in the case. Earlier search operations conducted at multiple locations led to the seizure of gold jewellery and cash valued at approximately ₹1.27 crore. Additionally, bank accounts containing balances of nearly ₹18 crore were frozen as part of the agency’s efforts to trace and secure the proceeds of crime.

The case highlights growing concerns over corporate fraud and the misuse of banking facilities through fabricated financial records and shell entities. Financial investigators are examining the role of various companies, intermediaries, and individuals who may have assisted in the diversion and laundering of funds.

Officials indicated that further investigation is underway to identify additional beneficiaries, trace the complete money trail, and uncover any larger network involved in the alleged fraud. The ED is also examining whether more assets acquired through the proceeds of crime can be identified and attached under the provisions of the PMLA.

The arrest marks a significant development in one of the major banking fraud investigations involving alleged manipulation of financial records, diversion of institutional credit, and large-scale money laundering. Authorities expect further disclosures as custodial interrogation progresses and forensic examination of financial records continues.