Karuvannur Co-operative Bank scam: Administrative panel dissolved, borrower allegedly dies by suicide

For years now, the Better Business Bureau’s survey research has shown that younger adults lose money to swindlers much more often than the older people you may think of as the stereotypical victims.

The administrative panel of the scam-hit Karuvannur Co-operative Bank in Thirssur district of Kerala was dissolved on July 22, and an administrator has been appointed by the Registrar of Co-operative Societies to take over daily operations.

Probes are on by various agencies into the details of the alleged scam.

On July 22, Moneycontrol reported that the bank was hit by an estimated Rs 100 crore scam. The fraud was carried out by pledging properties to draw fresh loans without the knowledge of original owners by an unholy nexus involving bankers, bank administrative officials and local real-estate mafia.
Borrower ends life

Meanwhile, one borrower who received a notice for loan overdue, allegedly committed suicide.

According to local reports, TM Mukundan, 57, a former panchayat member of the Porathissery panchayat, was found hanging in his house. His family alleged that while Mukundan's actual loan drawn was Rs 25 lakh, the bank asked him to pay back Rs 80 lakh, including a loan amount for which Mukundan had allegedly offered guarantee. Moneycontrol couldn't ascertain the actual amount Mukundan owes the bank.

Though he tried to negotiate a one-time settlement, there was no agreement. According to local reports, the bank has denied sending notice to Mukundan and argues the death isn't linked to it. An earlier email sent to Karuvannur Bank remained unanswered.

Till recently, the Karuvannur Co-operative Bank was a well-trusted local lender with a deposit base of Rs 290 crore, and a loan book of Rs 270 crore.

These are not updated figures but based on publicly available data. The bank is controlled by the Left parties and has party members on its administrative panel.

According to the bank’s website, it has five branches and one extension counter in Thrissur. The website says the bank started in 1921 and has 13 members on its director board. The President of the Board is K K Divakaran, a local CPM leader, according to reports. The bank is a popular institution in the district.

The audit by the Joint Registrar of Co-operative Societies found that these property documents were used illegally to borrow again by a nexus of of bank officials, director board members and some individuals belonging to the local real-estate mafia.

Loans were drawn using the same property documents already pledged in the bank and using fake signatures and letter heads. Preliminary estimates suggest that 46 documents were pledged and money was credited to different accounts, local reports said. Complete details are not known.

The police have booked six bank employees, including administrative members, for colluding with the real-estate mafia to divert funds. A case has been registered against six people — secretary TR Sunil Kumar, branch manager MK Biju, senior accountant CK Jilse, commission agent AK Bijoy and accountant of a supermarket under the bank, Raji Anil, and mediator Kiran, according to a report in The Hindu, quoting Irinjalakuda Circle Inspector MJ Jijo.

The Karuvannur scam is the latest in the state after the Popular Finance fraud last year and a series of similar incidents involving several smaller co-operative banks. Interestingly, while the Karuvannur probe is on, yet another co-operative bank fraud was reported in the Mugu Co-operative Bank in Kasaragod district. This Rs 32-crore fraud was allegedly committed by certain officials. Details of the scam are yet to be known.

The RBI has been clamping down on erring co-operative banks over the last few years. In 2020, the RBI had unleashed a big clampdown on co-operative banks. In the recent past, the central bank had cancelled the licence of four co-operative banks. They are Vasantdada Nagari Sahakari Bank, Karad Janata Sahakari Bank, CKP Co-operative Bank and the Mapusa Urban Co-operative Bank of Goa.

In 2020 (as Moneycontrol earlier reported), the RBI had issued almost 106 directives, either restricting their business operations or extending the period of existing directions.

About 60 of them were in the second half of the year. In other cases, the regulator imposed a monetary penalty. The RBI crackdown on co-operative banks continues in 2021 as well. In most cases, the findings point to poor governance and dubious deals.

If you are having thoughts of suicide, the following organizations can help. In India, call 24x7 toll-free mental health rehabilitation helpline 'Kiran' at 1800-599-0019.