KOCHI: Resolution continues to remain a mirage for the hapless depositors of the scam-hit Karuvannur Service Cooperative Bank in Thrissur. Even as the Enforcement Directorate (ED), which is probing the financial fraud, readies itself to return confiscated assets, bank officials are allegedly unwilling to accept possession — a reluctance that has left depositors stuck in an endless wait for their own money.
In its submission before the Special Court for PMLA (Prevention of Money Laundering Act) cases, the ED stated that the bank is the primary aggrieved party in the alleged money-laundering offence, and that eligible customers are legally entitled to have their deposits restored once the attached properties are transferred to the bank.
According to ED sources who spoke to TNIE, investigators have already identified proceeds of crime — including cash, movable assets, and immovable properties — which were subsequently attached. Four provisional attachment orders were issued under Section 5 of PMLA, covering assets worth Rs 128.82 crore.
The agency stated that it is prepared to hand over the attached properties to the bank, enabling it to release fixed deposits to rightful claimants. The assets include properties mortgaged to the institution itself, which could directly contribute to repayment.
The ED pointed out that under the Prevention of Money-Laundering (Restoration of Confiscated Property) Rules, 2016, the bank has the option to approach the court and seek formal restoration or release of these assets. “ Yet, no substantial step has been taken so far,” it said.
Speaking to TNIE, counsel for the ED said the bank’s “unwillingness” to take charge of assets ready for restitution has become a major hurdle in the resolution process.
He noted that a similar restoration was executed in the case pertaining to the financial crime at Kandla Service Cooperative bank — an investigation that began later, but was settled without friction.
‘Bank can compensate depositors if all attached assets are restituted’
Responding to the allegations, counsel for the bank maintained that the institution is “cooperating” with the investigation and has already filed a “counter” to the ED’s affidavit.
“We are waiting for the individuals named in the affidavit to file their responses. Several people have been accused in the complaint, and the court has given them an opportunity to respond,” said Anil Nair, counsel for the bank. Sreelal R L, administrator of Karuvannur bank, told TNIE that the ED has offered to restitute properties worth around Rs 120 crore, but several of these assets have counter cases pending in various courts. “Even if we receive them, we may still be unable to compensate depositors fully. What we are asking is for the ED to restitute properties that have no cases pending or no accused linked to them,” he said.
He said the bank is confident that it can compensate depositors if all the attached assets are restituted. Bank officials also reiterated that they are “not in a position to return documents of loans already cleared by borrowers, owing to the impounding of the files.” Meanwhile, depositors of the bank are preparing to approach the High Court seeking expeditious return of seized properties, as the resolution process continues to remain indefinitely stalled.
ED-bank faceoff
The ED chargesheet states the total proceeds of Karuvannur bank scam is
Rs I344 crore, with the principal amount being Rs I180 crore.
The central agency has offered to return assets worth Rs I128.82 crore.
However, Karuvannur bank claims the offered assets have pending cases and appeals
Bank says it can compensate depositors if “all the attached assets” are restituted
Karuvannur trail
The financial scam came to light when Sreekala E S, the secretary-in-charge of the bank, filed a complaint on July 14, 2021, alleging the former secretary and employees had swindled about `100 crore from the bank
The case was transferred to the crime branch on July 21, 2021. Subsequently, the ED initiated proceedings under the PMLA, 2002, on August 2, 2021
The ED has arrested several persons, including former bank secretary Sunil Kumar T R, Wadakancherry municipal health standing committee chairman and CPM member Aravindakshan P R, and former senior accountant of bank C K Jils. It has also questioned former minister and CPM leader A C Moideen and former MP P K Biju in the case
The ED uncovered serious lapses in the sanctioning of loans at the bank. It stated that there was deep-rooted conspiracy to embezzle money from the public and make gains for the party as well as its leaders