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Scholarship ‘Scam’ in 21 States: Lens on Madrasas, Tribal Schools as Funds Siphoned Off, Says Source

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In a surprising disclosure, it has come to light that out of the total of 1572 minority institutions in 21 states and the union territory of Jammu and Kashmir, a staggering 830 have fraudulently claimed Rs 144 crore in fake scholarships over the past five years, a source within the Ministry of Minority Affairs exclusively told CNN-News18 on Saturday.

An investigation into the alleged siphoning of funds allocated for pre-matric scholarships by the Minority Affairs Ministry, a practice that has persisted for decades, only came to light in 2016 when the digitisation of records brought forth scrutiny, source said. The investigation encompasses over 8 crore scholarships across 21 states, with 80 percent of them directed towards Muslim groups. At present, fake madrasas, tribal schools and officials are under investigation, they said.

Government sources said that a recent report has uncovered a massive scam amounting to hundreds of crores across 21 states. The report also highlights the existence of 40 crore fraudulent bank accounts with completed KYC formalities.

Investigations revealed for the year 2018-2019, a single mobile number was associated with all 2239 scholarships. In the period between 2019 and 2020, a total of 577 scholarships were linked to a single mobile number, as per reports.

The findings come years after the Minority Affairs Ministry launched an inquiry into the allocation of pre-matric scholarships in Jharkhand, prompted by concerns over potential diversion of funds by a network involving intermediaries, bank officials, school personnel and state employees.

In 2020, Chief Minister Hemant Soren announced his intention to launch an investigation into the alleged scam. This revelation surfaced through a series of reports by the Indian Express, shedding light on instances of fraudulent activity within the distribution of pre-matric scholarships authorised by the ministry for the 2019-20 period.

As per the newspaper’s findings, minority students across multiple districts in the state have fallen victim to a scheme where a collaboration of bank personnel, intermediaries, school officials and government employees has been deceiving them of a scholarship that is funded at the central level.


The scheme involving the provision of scholarships to students ranging from class 1 to PhD levels, encompassing both pre-metric and post-metric stages, commenced with the establishment of the National Minority Commission in 2007-2008. Since its inception, approximately 8 crore of these scholarships have been disbursed. For the academic year 2022-2023, there are nearly 26 lakh verified and approved applicants for this scholarship. The scholarships are accessible via the National Minority Commission or the National Scholarships Portal, where nearly 86 percent of the applicants belong to minority groups.

Starting in 2016, the digitisation process commenced, enabling the direct transfer of its associated benefits. Consequently, a minority student who represents an institution with a minority quota is required to obtain a stamp or approval from the minority officer of that institution. This minority officer is expected to be authorised and stamped by the district nodal officer or the minority nodal officer. This constitutes the initial scrutiny process through which applications are assessed, as per the findings.

CNN-News18‘s investigation, along with sources within the Minority Ministry, has confirmed that a red flag was raised shortly after the current Minister of Minority Affairs, Smriti Irani, assumed her position.

It was discovered that students from class 1 to 8, accounting for nearly 40 lakh applicants, have been excluded due to the provision of free education. Given that education is already free in all government institutions and government-aided establishments, the necessity for scholarships for classes 1 to 8 landed under scrutiny. Currently, these scholarships provided to minorities are fully funded by the Centre. There is no longer a 50-50 participation split between the state or any other entity in these scholarships, the report said.

Between 2007 till 2021-2022, nearly Rs 22,000 crore has already been dispersed. Annually an average of about Rs 2300 Crore has been dispersed. The eyebrows were raised within the ministry when 40 lakh scholarships were scrapped, there was no uproar.


Significant red flags emerged. These included instances of multiple concentrations of accounts within a single bank branch, a single SIM card being linked to 22 scholarships within the same class, schools designated for tribals and girls, yet receiving scholarships meant for boys, institutions with no hostels claiming benefits meant for hostels. And other irregularities such as the number of scholarship applications surpassing the actual student enrollment.

Union Minister Smriti Irani in her reply in the Parliament during the recently concluded Monsoon session said the National Commission for Applied Economic Research (NCAER) has been commissioned to deep dive into the matter and investigate the “irregularities”.


There are estimated to be over 1.80 lakh institutions that fall under the category of entire minority-backed institutions or institutions for minorities. The NCAER has been mandated to probe the alleged irregularities in 100 districts across 34 states and union territories.

They initially delved into 1572 institutions in 21 states and the union territory of Jammu and Kashmir. Following the probe, it was revealed that nearly 830 of these 1572 are fraudulent at various levels.


Subsequent to the scholarship scam investigation initiated after the IE report in 2020, the Central Bureau of Investigation (CBI) undertook a thorough examination of the matter. Certain states filed FIRs and made arrests, yet the issue eventually subsided as the states later returned, asserting that everything had been resolved.

However, separately, CNN-News18 is awaiting confirmation from the CBI regarding a report that indicates around July 10 to 12, the ministry itself moved the CBI and requested their involvement in addressing the massive fraud. Among the 830 out of these 1572 institutions, these 830 have fraudulently claimed Rs 144 crore in fake scholarships over the last five years.

It was further disclosed that there are areas in the country where a single bank holds as many as 66,000 scholarship accounts. Moreover, specific districts have reported an astonishing 8 lakh scholarships disbursed in the last 5 years.

The investigation also revealed that 53 percent of institutions in Jammu and Kashmir are fake, and there are 62 fraudulent institutions in Chhattisgarh.


Speaking to CNN-News18, Islamic scholar Atiq ur Rehman said, “Government officials must have been involved in the scam, I am scared #BJP govt will now stop funds for the minority.”