Thiruvananthapuram: The cooperative sector in Kerala is facing a vast trust deficit after being rocked by a series of scams like the recent financial frauds involving the Thrissur Karuvannur Co-operative Bank and the Palakkad Kannambra Service Cooperative Bank.
What is disheartening is that fraudsters are looting the hard-earned money of the masses who live on a shoestring budget to eke out some savings for the future. For that, the scammers plot conspiracies, forge fake documents, abuse power and position, and whatnot. Yet the officials tasked with tracking and preventing such irregularities feign ignorance to such happenings while the Department of Cooperation remains a mute spectator.
There are over 15,000 cooperative societies in the state, and the financial irregularities were reported only in a few of them. However, the sector in total is facing a considerable trust deficit.
The cooperative societies are struggling to keep afloat, managing challenges one after the other — may it be the note ban, flash floods, Covid, or recession.
Yet, the sector was instrumental in rolling out flood rehabilitation projects, Care Home projects, Covid compensation, and the like, providing succor to people in trying times. Their role in making the government initiatives like KSRTC and welfare pension schemes a success is beyond doubt. However, the recent scams have taken the sheen out of the sector.
The situation demands an urgent intervention of the government, which should come out with stringent measures to stop the mafia, or else the damage to the state’s rural economy will be beyond repair. It should not remain a mute spectator to a handful of persons attempting to destroy the sector, defeating the sincere efforts of many popular individuals holding responsible positions in societies and that of hard-working employees.
The misuse of influence
It happened when the UPA government was in power at the centre. Then, the Reserve Bank of India restricted a Kerala-based Urban Bank, under the control of a Congress MP from the state, from granting or renewing loans. Despite having political clout, the bank could do nothing against the penal action. The restriction continued for months.
Think what would happen if the same was imposed on a cooperative bank in Kerala? Let the Cooperative Registrar, the highest authority of power with regard to Cooperative banks, issue such a directive. Due to high political pressure, the registrar will probably be forced to withdraw the order the following day. The example answers queries about why financial irregularities are happening in the state’s cooperative sector. If one has political influence, they can even over-ride the directions of the highest authority in the sector.
A close analysis will reveal that all financial frauds in cooperative societies are similar, where the governing body members and the employees collude to commit the acts. Those who attempted to bring out the wrong-doings were cornered. The Cooperative Department, vested with powers to act in such situations, chose to ignore them.
The frauds have happened in the cooperative societies controlled by the LDF, UDF, and BJP factions.
The common people mainly depend on Service Cooperative Banks or Primary Agricultural Cooperative Banks (PACB). The state has over 1,600 PACBs. What is alarming is the fraud happening in a few PACBs and certain branches of the Kerala Bank.
Lakhs for ‘non-existent’ gold; crores against wasteland
What happened in the Karuvannur bank scam, termed the “biggest bank robbery” in the state, is a mix of the models of all small and big frauds that occurred elsewhere in the sector. Funds worth over Rs 300 crore were swindled by fraudulent practices such as extending loans in the name of non-existing persons, loans in the name of depositors without their knowledge, siphoning off money from customers’ inactive accounts, and passing loans to dear and near without pledging anything as collateral security.
Other fraudulent practices
- The Narakathara branch of Kumarapuram cooperative bank in Harippad, Alappuzha, sanctioned a loan of Rs 1 crore against the names of 15 persons. Much of the loan amount, suspected to be taken through ‘binami’ dealing, was not repaid. An audit was undertaken, and suddenly the loan accounts got closed. When the authorities scrutinized financial transactions of the past two years, it was found the loan was passed in 32 cases without pledging any jewellery as collateral, resulting in a loss of Rs 85 lakh.
- Allotting loans against properties with far less market value was what happened in the cases of Ettumanoor and Karappuzha service cooperative banks. When the Ettumanoor fraud came to light, the officials who went to seal the pledged land found it to be a wasteland.
- A native of Aayavana took a loan of Rs 10 lakh from the Muvattupuzha Agricultural Rural Development Service Cooperative bank and repaid the loan installments on time. However, he was shocked to learn that Rs 20 lakh was passed against his name without his knowledge. A ruling member of the society had siphoned off the remaining Rs 10 lakh.
- The loan beneficiaries of the Palakkad Elapully Service Cooperative bank made timely repayments. However, the amount was not accounted for.
- Misappropriation of funds to the…
