New Delhi, Sep 28 (IANS): The Enforcement Directorate (ED) has arrested Sajeevan Kollapallil in connection with an ongoing investigation in a money laundering case for fraud in connection with the Pulpally Service Cooperative Bank, an official said.

The accused was produced before the PMLA Special Court in Kozhikode which sent him to ED's custody till September 30.

The ED initiated a PMLA investigation based on an FIR registered by the Vigilance and Anti-Corruption Bureau in Wayanad, Kerala, against the governing body members and bank officials of the Pulpally Service Cooperative Bank, Wayanad.

The ED investigation revealed that the bank officials and its governing body members sanctioned enhanced loans without the consent and knowledge of the loan applicants by overvaluing the properties offered as collateral and the over and above amount of the loans were given to a private individual named Sajeevan Kollapallil.

The loans were not repaid by the applicants and thus caused a total loss of Rs 5.62 crore to the Pulpally Service Cooperative Bank.

"The proceeds of crime in form of overvalued loan were credited in the bank account of Sajeevan Kollappallil, maintained with Pulpally Service Cooperative Bank, Pulpally. By acquiring, possessing and siphoning of the proceeds of crime, Sajeevan Kollappallil has committed the offence of money laundering as defined under Section 3 of the PMLA, 2002, punishable under Section 4," the ED said.