Minority scholarship scam: CBI FIR says 830 fake institutes cost exchequer Rs 144 crore

The Ministry of Minority Affairs lost more than Rs 144 crore as a result of 830 "fake" organisations purportedly receiving benefits under the minority scholarship programme during the fiscal years 2017–18 and 2021–22, according to a FIR filed by the CBI into the alleged scam.

These are institutions listed with the National Scholarship Portal (NSP) that were discovered to be "either non-operational or fake, or partial fake," according to the FIR filed in response to the ministry's claim.

More than 700 alleged fraud instances involving these 830 institutes were found in only five states -- Assam (225), Karnataka (162), Uttar Pradesh (154), Rajasthan (99), and Chhattisgarh (62).

The ministry said in its complaint—which is now also part of the FIR—that, "Considering various reports received on embezzlement of funds under the Scholarship Schemes, the Ministry has engaged National Council of Applied Economic Research (NCAER) to carry out Third Party Evaluation of the Scholarship Schemes. Besides, the Ministry also carried out evaluation through National Scholarship Portal (NSP) by generating Red Flags on doubtful Institutions/Applicants."

The lawsuit claimed that between 2017–18 and 2021–22, these 830 institutes caused an estimated loss to the exchequer of Rs. 144.33 crore in the form of grants.

According to the CBI's FIR, the IPC sections of criminal conspiracy, cheating, forgery, and provisions of the Prevention of Corruption Act were employed to register the FIR against anonymous employees of banks, institutions, and others. 

According to red flags raised by NSP, a total of 1,572 institutes were identified for evaluation. 

The ministry studied a total of 1,572 institutions across 21 states after learning about widespread fraud in the media. 830 institutions that were either "non-operational or fake or partial fake" were found to have irregularities per the results of the investigation. 

The most blatant inconsistency was discovered at the school or institution level, where the team discovered numerous establishments that are absolutely non-operational but are nevertheless receiving benefits from the scheme, the ministry said in the report. 

A number of schools from states like West Bengal have the majority of applicants listed as bogus are either from operating primary or pre-primary classes or there are no minority pupils enrolled in the institutions, the report said. 

The ministry claimed that it was possible to identify the loss within the time frame that digitised data on NSP was accessible and that the fraud may have existed far before 2017–18.

The ministry provides these grants to pupils from the six minority communities---Muslims, Christians, Sikhs, Jains, Buddhists, and Parsis. Students from 1.80 lakh institutions across the nation are benefited by these scholarships.

Nearly, 65 lakh students obtained scholarships annually in the five years ending in 2021–2022.

“This would not have been possible without the collusion of institutions, applicants, institute nodal officer, district nodal officer, and bank officials as scholarship amount is directly credited to bank account of the beneficiaries," the ministry stated in its complaint dated July 10.

(With PTI inputs)