Karuvannur co-op bank scam returns to haunt CPI(M), ED summons district secretary

The ED has been investigating allegations of a multi-crore loan scam at the Karuvannur Service Cooperative Bank in Thrissur. The scam, which allegedly involved the siphoning off of illegal loans worth crores, has raised serious concerns about the integrity and regulatory oversight within Kerala’s cooperative banking sector.

Varghese, who was questioned by the ED in November, now faces renewed scrutiny over his alleged involvement or knowledge of the illegal activities that transpired within the bank.

Speaking to the media, Varghese indicated that he would consult with his party before responding to the summons.

The ED’s investigation has also cast a shadow of suspicion over the CPI(M) leadership, with allegations surfacing that key figures within the party were aware of the fraudulent activities but failed to take decisive action to prevent them.

Earlier, ED had questioned CPI(M) leaders, including MLA and former minister AC Moideen, and Kerala Bank vice-president MK Kannan.

Related: Family of deceased man says bank did not allow withdrawal of deposit

High Court miffed over probe delay 

Meanwhile, the Kerala High Court criticised the ED on 18 March for the delay in concluding the probe into the scam. The court then observed that the agency could not keep the investigation going on forever, and directed it to file the case details.

The court then observed that the transactions involved in the bank scam posed serious questions, and they should be dealt with with the seriousness they deserve.

Besides exposing vulnerabilities within the cooperative banking framework, the Karuvanur Bank fraud case also sparked broader discussions about regulatory loopholes and the need for stringent oversight to safeguard depositors’ interests and prevent such scams from recurring.

It has been alleged that loans were passed and disbursed in the names of the poor without their knowledge, at the behest of a few CPI(M) leaders.

The ED said that its probe had found that “on the instructions of certain persons, who were district-level leaders and committee members of a certain political party and governed the bank, loans were disbursed by the bank manager through the agent in cash to non-member ‘benamis’ by mortgaging properties of poor members without their knowledge and laundered to the benefit of the accused.”

The CPI(M) has been locked in a fierce electoral battle with the Congress-led UDF in Kerala to better its tally in the 18th Lok Sabha. In the previous poll, the party-led LDF had to be content with one seat, while the UDF won the remaining 19 constituencies in the state.

(Edited by Majnu Babu).