Srijan scam: How it all happened


The CBI has taken over the probe into the Srijan scam in Bihar, in which government funds worth about Rs 1,000 crore were allegedly diverted to the accounts of a non-government organisation.

The central probe agency has registered 10 FIRs in the case, which was being investigated by the Economic Offences Unit (EOU) of the Bihar Police

Chronological Events in Srijan Scam:

1996: After the death of her husband Avadhesh Kumar in 1991, Manorama Devi set up Srijan Mahila Vikas Sahyog Samiti in year 1996. The society was registered for women in small income-generating activities like stitching, making bindis, incense sticks, sattu, etc.

2003: Every thing was going smooth till 2003, when Bhagalpur DM KP Ramaiah announced a scheme for 50% subsidy to women for the purchase of sewing machines. Srijan purchased 1000 machines from the vendor and all the women who got them became Srijan members.

Manorama Devi gets over 24000 square feet land on 30 years lease for a meager Rs. 2400 a year. The land is marked for the office of her cooperative society, which also started banking operations for self-help groups in Sabour.

People thought it as genuine bank,however it was not exactly a bank as it was not affiliated to the central cooperative bank of Bhagalpur.

KP Ramaiah directs all block development officers, rural development and panchayat members to put deposits with Srijan. Government Funds are illegally transferred into Srijan’s accounts so that the latter can earn interest on them.

Feb 2017: NGO founder Manorama Devi died in February 2017.

How the Scam Was Carried out?

The scam was carried out through direct deposit of government funds into the accounts of the NGO, either through fake third-party endorsements or via forged cheques.

The fake endorsements method includes transfer of funds from the state to the Bhagalpur administration. The bank would then get the administration to make a fake endorsement on the back of a cheque to deposit it to Srijan.

In the second method, a duplicate cheque series was released for a valid government account that was handed to Srijan. The NGO would then forge the District Magistrate’s signature to transfer the funds into its own account.

How Did the Scam Come to Light?

The scam came to light after a government cheque of Rs 270 crore bounced on 4 August. The cheque was meant to be paid to farmers in lieu of their land for a power plant. An internal inquiry was conducted and the District Magistrate discovered that the government account did not have enough funds.

People who had taken loan illegally from the NGO started defaulting in payment which resulted in the NGO being unable to replenish money in government accounts at the time of issuance of a cheque. The scandal thus came to light when a cheque worth 10.32 crore INR bounced on August 3, 2017.