Kerala needs to clean up co-ooperative banks’ books
Several reports of financial misappropriation have put Kerala’s cooperative banks in a tight spot. The entire sector has come under the scanner after the Enforcement Directorate arrested a local CPM leader in connection with a scam at the Karuvannur Service Cooperative Bank in Thrissur district; the money laundering case alleges Rs 150 crore was drained from the bank. This is the first political arrest since the scam surfaced in 2021, but the ED is questioning several leaders, including former minister A C Moideen, in connection with it. Meanwhile, the Pulpally Primary Service Cooperative Bank in Wayanad, which is controlled by a Congress leader, is embroiled in a controversy over Rs 8 crore in allegedly fraudulent loans. Other cooperative banks controlled by the CPI and the Indian Union Muslim League, too, are facing similar charges.
That all is not well with the sector was clear last year when Kerala’s minister of cooperation, V N Vasavan, said in the state assembly that financial fraud had been found at 399 cooperative institutions over the previous six years. The sector has a two-tier structure in Kerala after the merger of fourteen district cooperative banks with the Kerala State Cooperative Bank, which is now called the Kerala Bank. The second tier is made up of hundreds of primary agriculture cooperative societies and urban cooperative banks. While the CPM controls most of the agricultural and urban banks, the Congress runs a significant number of cooperative societies across the state, too.Discrepancies have been reported earlier, but this is the first time the central agency is looking into the sector, creating a flutter across the state.
The state government, however, alleges that the Centre is trying to shatter the credibility of the state’s cooperative sector by using the ED and singling out a few banks that have not favoured multi-state cooperative societies, a pet idea of the RSS. Whether that is true or not, thousands of people who have invested in cooperative societies are panicking. It is the duty of the state government to protect their investments. It is a pity that the government turned a blind eye to the crisis despite several red flags raised over the last few years. It is time for the government to clean up the books if it wants to protect the credibility of the sector.