Kerala HC clears prosecution of SNDP Yogam chief Natesan in ₹15.85 crore microfinance scam
Synopsis
The Kerala High Court has cleared the path to prosecute SNDP Yogam General Secretary Vellappally Natesan in a ₹15.85 crore microfinance fraud without needing prior government sanction — removing the single biggest procedural shield protecting the accused in a case that has dragged since 2016.
Key Takeaways
The Kerala High Court ruled on 6 November 2026 that no prior government sanction is required to prosecute accused in the ₹15.85 crore SNDP Yogam microfinance scam .
Vellappally Natesan , General Secretary of the SNDP Yogam , and former KSBCDC Managing Directors are among the accused.
The VACB originally registered the case in 2016 ; petitions seeking a thorough probe were filed in 2020 .
The alleged fraud involves ₹15.85 crore in microfinance funds sanctioned for marginalised communities that were allegedly diverted.
The next hearing is scheduled for 17 November 2026 ; the question of a Special Investigation Team remains pending.
The Kerala High Court on Friday, 6 November 2026, removed a critical legal obstacle in the ₹15.85 crore SNDP Yogam microfinance scam, ruling that prior government sanction is not required to prosecute the accused — a group that includes Vellappally Natesan, General Secretary of the Sree Narayana Dharma Paripalana (SNDP) Yogam, and former Managing Directors of the Kerala State Backward Classes Development Corporation (KSBCDC). The order effectively unblocks criminal proceedings that had stalled over a procedural dispute about sanction requirements.
What the Court Ruled
Justice A. Badharudeen passed an interim order while hearing petitions seeking a thorough and effective probe into the alleged fraud. 'Interim order passed, holding that no prosecution sanction is required,' the court stated. The matter will come up for further hearing on 17 November.
Background: The Alleged Fraud
The case centres on the alleged misappropriation of ₹15.85 crore released by the KSBCDC as loans under a microfinance scheme designed to benefit members of marginalised communities. The funds were sanctioned to the SNDP Yogam, which allegedly diverted the money rather than directing it to its intended beneficiaries. The Vigilance and Anti-Corruption Bureau (VACB) registered the case back in 2016, naming Natesan, other Yogam office-bearers, and former KSBCDC Managing Directors among the accused.
The Prosecution Sanction Dispute
The question of whether prior government sanction was necessary to proceed against certain accused had effectively stalled the case. In August 2026, the investigating officer informed the court that the involvement of several accused had been identified across eight cases and that government sanction was required to proceed against certain officials. However, the state government took the opposing view. State Attorney Anoop V. Nair argued that the SNDP Yogam was not a government nodal agency and did not qualify as a 'public servant' under the Prevention of Corruption Act, making prior sanction unnecessary. The petitioners had argued the reverse. Friday's interim order settles this question in favour of proceeding without sanction.
Who Is Vellappally Natesan and Why It Matters
The SNDP Yogam is one of Kerala's most influential socio-cultural organisations, representing the Ezhava community — the single largest Hindu community in the state. Natesan, as its General Secretary, wields considerable social and political reach in Kerala. His potential prosecution in a case involving funds meant for marginalised communities carries significant implications beyond the courtroom — touching questions of institutional accountability and the oversight of public money channelled through non-governmental bodies.
What Happens Next
The petitions seeking an effective investigation, originally filed in 2020, will be taken up again on 17 November. With the sanction hurdle now cleared by the interim order, investigators may be able to push proceedings against previously shielded accused. Whether the probe is ultimately handed to a Special Investigation Team — as sought by the petitioners — remains to be decided by the court.
Point of View
But it received state-sanctioned funds meant for the marginalised; the Prevention of Corruption Act's 'public servant' definition has long struggled to keep pace with this grey zone. That the case has taken a decade since VACB registration to clear even a sanction hurdle speaks to how effectively institutional influence can slow the wheels of justice. With the sanction barrier now gone, the court's willingness to order a Special Investigation Team on 17 November will be the real test of whether this case moves forward or continues to drift.
NationPress
6 Nov 2026
Frequently Asked Questions
What is the SNDP Yogam microfinance scam about?
The case involves the alleged misappropriation of ₹15.85 crore released by the Kerala State Backward Classes Development Corporation as microfinance loans meant for marginalised communities. The SNDP Yogam, which received the funds, is accused of diverting them. The Vigilance and Anti-Corruption Bureau registered the case in 2016.
Why did the Kerala High Court's ruling matter on 6 November 2026?
The court's interim ruling removed the key procedural obstacle in the case by holding that prior government sanction is not required to prosecute the accused, including SNDP Yogam General Secretary Vellappally Natesan. This unblocks criminal proceedings that had stalled over the sanction dispute.
Who is Vellappally Natesan?
Vellappally Natesan is the General Secretary of the SNDP Yogam, a powerful socio-cultural organisation representing the Ezhava community — the single largest Hindu community in Kerala. He is among those named as accused in the ₹15.85 crore microfinance fraud case.
What happens next in the SNDP Yogam fraud case?
The Kerala High Court will take up the petitions seeking an effective investigation again on 17 November 2026. Petitioners have sought a Special Investigation Team headed by a senior officer; that question remains to be decided.
What was the government's position on prosecution sanction?
The state government, through State Attorney Anoop V. Nair, argued that no prosecution sanction was necessary because the SNDP Yogam is not a government nodal agency and its office-bearers do not qualify as public servants under the Prevention of Corruption Act. The court's interim order sided with this position, though it was opposed by the petitioners.
