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The Rs 100-crore Karuvannur bank fraud that rocked Kerala, explained


In a controversy that has now rocked Kerala, a Rs 100-crore bank fraud was uncovered in Thrissur’s Karuvannur Cooperative Bank. It also significantly impacts the ruling CPI(M), as the bank’s Board had members of the party, and was led by local CPI(M) leader KK Divakaran, and is the latest in a list of controversies the ruling party is embroiled in. With the Assembly currently in session, the bank fraud dominated the session and led to a walkout by the UDF. Congress member Shafi Parambil called the fraud as the tip of the iceberg, and termed it as the “biggest bank robbery” in Kerala. The Congress has alleged that the CPI(M)’s leadership has kept the scandal under wraps despite knowing the extent of it.

The fraud involves faked signatures, benami transactions, remortaged properties, and several people receiving collection notices for amounts they never borrowed. The matter took a turn when a former Panchayat member died by suicide, allegedly after receiving a foreclosure notice for recovering amounts he never borrowed.

Sixty-three-year-old TM Mukundan, formerly a member of the Porathissery panchayat, died by suicide on July 22, 2021 allegedly because he received a foreclosure notice for recovery from the bank. Mukundan, who had his savings at the Karuvannur Cooperative Bank, borrowed Rs 30 lakh a few years ago, and revised his loan. In a statement, the bank said that Mukundan took two loans -- of Rs 50 lakh and Rs 30 lakh. It added that a notice for repayment of the loan had been sent in February, but after he said he did not have the money to repay the amount, the bank allegedly gave him more time was given and he has since not been asked.

Who is involved
The bank was reportedly a trustworthy financial institution, and according to its own statement, had a deposit base of Rs 411 crore. With the bank under severe financial distress and once the scam came to light, depositors have been rushing to retrieve their money. However, the bank is only giving people Rs 10,000 each day, and that too under a token system, putting depositors in a hard place.

Discrepancies of the fraud first came to light in 2019. A probe was sanctioned in August 2019 by the joint registrar of cooperation (Thrissur) and according to the New Indian Express, the probe was completed by October 2020, but no subsequent action had been taken.

The audit report found that the scam primarily involved six people, including the bank manager Biju Kareem, secretary TR Sunilkumar, accountant Jils CK and a member of the bank, Kiran, who was reportedly a commission agent. Biju is a CPI(M) Porathissery local committee member, and Sunilkumar is a Karivannur local committee member.



The audit committee panel had also recommended a probe by the Vigilance and Anti-Corruption Bureau.

Political reactions
After the party came under fire for the fraud, CPI(M) district secretary MM Varghese told reporters that if people are found guilty, they will be removed from the party.

With the Assembly in session, the fraud dominated the conversation on July 23, Friday. The Congress alleged that though the fraud had come to light in 2018, the governing council of the Karavannur Cooperative Bank in Irinjalakuda in Thrissur district was dismissed only on Thursday, justifying their allegation that the Marxist party had taken a decision to keep the fraud a secret. “What were you doing in these three years," Opposition Leader V D Satheesan asked.

Minister of Cooperation VN Vasavan has refuted the charges and said the government acted promptly and seven bank employees, allegedly involved in the fraud, had already been suspended. A complaint in this regard was lodged for the first time on January 16, 2019 and police registered a case within a week.

On the charges of delay in dismissing the bank governing council, the minister said there were some mandatory proceedings to be followed, including conducting a probe, before doing so.

The irregularity was estimated to the tune of over Rs 104 crore, the minister said.

"A crime branch probe is on into the incident. The Cooperation Department is also carrying out a separate probe," Vasavan added.

Congress’ Shafi Parambil has alleged that imaginary names were used by those involved in the scam to dole out loans of over Rs 50 lakh each to 50 people. In addition, he alleged 379 illegal loans were also given out by the bank — which were anywhere between Rs 13 crore and Rs 26 crore.

The situation was that the account holders, who had not taken a loan of even one rupee, had to repay up to Rs 100 crore, he said.

The Palakkad legislator also charged that the party itself had carried out a probe into the scam but kept all the findings, which confirmed the irregularity, under wraps in these years.