Ever since the scam in Karuvannur Cooperative Bank of Kerala has come to light, Nafcub President Jyotindra Mehta has turned sad due to the fact that the news item has dented the reputation of the co-operative movement.
Mehta phoned Indian Cooperative to convey that the said bank (Karuvannur Cooperative Bank) is not a bank and has no RBI licence to run an urban cooperative bank. “It is actually a credit society and not a bank, ” Mehta was emphatic.
Partially blaming RBI for no action in the matter, the Nafcub President wondered why RBI takes no action in such cases when a credit co-op uses the name of a bank and suffixes the word “Bank” in its name.
“There are clear-cut guidelines that no entity can use the tag bank unless the Regulator (RBI) gives it a licence and authorizes it to use the tag-bank”, underlined Mehta. Such rampant use of the tag and subsequent hanky-pankies indulged in by them leads to general rejection of co-op banks among people and media, asserted Mehta.
Mehta also revealed that there are several credit co-operatives in the state of Kerala which use the tag “bank” indiscriminately. It is high time, RBI should take note of it, he stressed.
Expressing a similar view on social media, Satish Marath, RBI Director and a senior Sahakar Bharati leader wrote “This is not a Bank ! By calling itself a Bank, this Primary Agri Co-op Society ( PAC ) has misled the Depositors and also tarnished the image of the Banking Industry.”
“Steps need to be initiated by Kerala Govt & RBI to direct and ensure that PACs drop the word “Bank” from their names. This issue also need to be taken up with Karnataka Govt”, Marathe concluded.
It bears recall that Kerala, the only state ruled by communists, has become the hotbed of cooperative scams. Hardly a day goes by without the state reporting bank frauds. On the heels of the scam breaking at the Karuvannur Cooperative Bank, another scam at the Karakalam cooperative bank dominated by CPM people has come to light.
It bears recalling that a massive loan scam involving Rs 100 crore broke at the Karuvannur Cooperative Bank in Thrissur which is controlled by the CPM. Police say the swindle was carried out from 2014 to 2020.
Police sources say a case has been registered against the previous board and other cooperative officials. Many people who took loans and repaid their loan amount regularly received notice from the bank regarding attachment of property, preliminary investigation revealed.
Later it was found that the same property had been mortgaged several times and the loan amounts were transferred into certain ‘beneficiaries”. Hence, a probe was initiated into the complaints of the borrowers and the scam came to light.
Most of the co-op organizations in Kerala are controlled as well as filled with the ruling CPM faithful. The CPM makes sure that their cadres are recruited as the employees of the banks administered by them. They are mostly area committee members.
However, the administrators of the local branches of the banks will be CPM leaders from lower ranks. Hence the administration cannot override its employees while making decisions, reports Kerala based media houses.