The Directorate of Enforcement (ED) has provisionally attached immovable properties worth ₹18.33 crore belonging to Kallam Peri Reddy and his associates in connection with a bank loan fraud involving Kallam Modern Rice Mills Pvt Ltd, the central agency announced on Tuesday, 10 November. The attachments, carried out under the Prevention of Money Laundering Act (PMLA), 2002, follow the alleged use of fake and forged documents to secure credit from the State Bank of India (SBI).

Background of the Fraud

The ED's Visakhapatnam Sub-Zonal Office initiated its investigation on the basis of a First Information Report (FIR) registered by the Central Bureau of Investigation (CBI), Economic Offences Wing (EOW), Chennai, acting on a complaint from the State Bank of India (formerly the State Bank of Hyderabad), Guntur. According to the agency, between 2010 and 2013, entities linked to Reddy — namely Kallam Modern Rice Mills Pvt Ltd, Sri Ramabrahma Modern Rice Mills Pvt Ltd, and Sri Vinayaka Traders — obtained credit facilities worth ₹24.57 crore from the SBH's Arundelpet Branch, Guntur, by submitting allegedly forged title deeds of collateral properties.

The diverted funds are said to have caused a loss of ₹18.33 crore to the bank. The scale of the alleged fraud and the network of entities involved point to what investigators describe as a systematic financial operation.

Web of Shell Entities and Cash Withdrawals

Investigation reportedly revealed that Kallam Peri Reddy operated and managed approximately 26 entities registered in the names of relatives, employees, and associates — including the three primary borrower concerns named in the CBI complaint. According to the ED, analysis of bank accounts showed that cash of approximately ₹23.81 crore was withdrawn from the cash credit accounts of these three borrower concerns, with withdrawals recorded in the names of workers, accountants, and Reddy himself.

Investigators further found that several properties were purchased using loan proceeds, partly through cash withdrawn from accounts controlled by Reddy. Additionally, the ED stated that Reddy transferred certain immovable properties to relatives and associates without receiving any sale consideration, with those individuals serving as nominal owners while Reddy allegedly remained the actual beneficial owner.

Properties Attached Across Two States

Acting on these findings, the ED provisionally attached a total of 55 properties — comprising 50 immovable properties valued at ₹16.88 crore and five residential flats valued at ₹1.45 crore — located across Andhra Pradesh and Telangana. All attachments have been classified as proceeds of crime under PMLA, 2002.

This is the latest in a series of enforcement actions by the ED against alleged bank loan fraudsters operating through multi-layered corporate structures in southern India. The agency stated that further investigation is ongoing.

What Happens Next

Provisional attachment under PMLA is typically followed by proceedings before the Adjudicating Authority, where the accused party may contest the attachment. If confirmed, the properties can be forfeited to the government. The continuation of the probe suggests additional attachments or arrests may follow as the ED works through the remaining financial trail.