Karuvannur bank officials formed cartel, forged papers to loot Rs 300 crore
THIRUVANANTHAPURAM: The report of a probe team led by cooperation department assistant registrar Omana KL had unearthed illegal activities in Karuvannur Service Cooperative Bank near Irinjalakuda since 2011 which led to a few officials and their relatives availing of loans worth over Rs 100 crore.
The nexus formed by a few bank officials who had helped each other to siphon off money and invest the same in their personal businesses was revealed in the report with evidence. As the probe focused on loans that had been overdue, several loans which were granted earlier flouting norms and settled by the customers concerned before the probe commenced hadn’t come under its purview.
According to Suresh Kumar, who was a staffer of the bank and the whistle-blower in the case, the total fraud would exceed Rs 300 crore if all illegal transactions are accounted for. Suresh Kumar said the fraud began in 2003 and he had flagged the malpractices to senior CPM leaders in 2005, but they ignored the complaint.
The probe report says the malpractices in the bank began from the stage of enrolling new members.
“Memberships were granted flouting norms in the cooperation law and rules concerned and the cooperative bank’s bylaw. Though it is specifically said that only those who reside under the jurisdiction of the bank or own land in that region (Porathissery, Madayikonam and Irinjalakuda villages) are eligible for A class membership, we found that members were added even from outside Thrissur district, violating provisions in the bylaw. While their identity documents and address proof were kept in the file, the address in the application form was corrected to suit the criterion,” the report notes.
Bank gave hundreds of loans for Rs 50L and above to illegal members
Hundreds of loans for Rs 50 lakh and above were granted to such illegally enrolled members and many of them subsequently turned defaulters. The officials also recorded that bank staff hadn’t provided them with full details of the members for verification. “For facilitating enrolment of illegal members, the minutes book of the director board was corrected and even the bank president’s signature forged,” found the probe. A list of 54 such members was included in the report.
Disbursement of loans exceeding the individual maximum borrowing power (IMBP) to members, a majority of them illegally enrolled, had been rampant since 2011. Huge sums had been passed as loans to members whose IMBP score fell far below the eligibility criteria. The report lists 28 such loans ranging from Rs 34 lakh to Rs 85 lakh sanctioned by the bank without any valid examination of IMBP. All of them turned defaulters later.
Though the bylaw restricts the maximum amount the bank can issue as loan to Rs 50 lakh, the probe found 279 loans exceeding Rs 50 lakh distributed by the bank in the last 10 years. Though routine audits were done by the cooperation department, such manipulations were never reported. Manipulation of Gahaan document was another fraud detected in loans disbursed based on security of land. Gahaan is the online entry system where the bank assigns a plot of land as surety for loan and this is communicated to the village office concerned. An outstanding Gahaan will deny the owner possession certificate and such land can’t be mutated in any other person’s name.
That means Gahaan will ensure that the pledged land is not sold or re-pledged somewhere else till the pending loan is cleared. But in Karuvannur bank, several defaulters had got their Gahaan records cleared while repayment of lakhs had been pending. Many had sold their property after getting the documents cleared from the bank illegally.
The probe also found that loans of huge sums were sanctioned to members who hadn’t even applied for them. The amounts thus sanctioned were transferred from the accounts of the members to those of the conspirators using the technical loopholes in the software used in the bank.