The Kerala government is preparing a comprehensive rescue package for 441 financially distressed cooperative banks and institutions, aimed at protecting depositors and restoring confidence in the state’s cooperative banking sector.
The Cooperation Department is assessing the reasons for financial distress and examining responsibility for irregularities before finalising assistance. The package is expected to complement the Deposit Guarantee Scheme, under which the maximum guaranteed deposit has recently been raised to ?10 lakh.
Cooperation Minister M. Liju said discussions are underway on pooling resources, including funds from bank surcharges, and providing assistance linked to the losses suffered by individual institutions. Financial restructuring and depositor protection are also being considered.
The crisis gained prominence following irregularities at Karuvannur Cooperative Bank and subsequent difficulties faced by depositors in several districts. The government is examining the issue as a sector-wide concern.
The Registrar of Cooperative Societies has directed distressed institutions not to use depositors’ money for employees’ salaries. Authorities are also considering recovering losses from those responsible for irregularities and making assistance conditional on management restructuring where necessary.
The final package will focus on accountability, institutional revival and restoring depositor confidence.
