Karuvannur bank officials formed a cartel and falsified papers to loot Rs 300 crore – The New Indian Express
Express news service
THIRUVANANTHAPURAM: The report of an investigative team led by the Deputy Registrar of the Cooperation Department, Omana KL, had uncovered illegal activities in the Karuvannur Cooperative Services Bank near Irinjalakuda since 2011, which led some officials and their relatives to benefit from loans worth more than 100 crore rupees.
The connection formed by a few bank officials who had helped each other siphon money and invest the same in their personal affairs was revealed in the report with evidence. As the investigation focused on delinquent loans, several loans that had been granted earlier in violation of standards and settled by affected clients before the investigation began fell outside its jurisdiction.
According to Suresh Kumar, who was a bank staff member and whistleblower in the case, the total fraud would exceed Rs 300 crore if all illegal transactions were accounted for. Suresh Kumar said the fraud started in 2003 and that he reported the misconduct to senior PMO officials in 2005, but they ignored the complaint.
The report of the investigation indicates that embezzlement in the bank began as soon as the registration of new members.
“Memberships were granted in defiance of the standards of the law and the rules of cooperation concerned and of the internal regulations of the cooperative bank. Although it is specifically said that only those who reside under the jurisdiction of the bank or own land in this region (villages of Porathissery, Madayikonam and Irinjalakuda) are eligible for Class A membership, we have found that Members were added even outside the Thrissur district, violating the regulations. While their identity documents and proof of address were kept in the file, the address of the application form was corrected to meet the criterion, ”notes the report.
Bank has granted hundreds of loans for Rs 50L and more to illegal members
Hundreds of loans of Rs 50 lakh and more have been granted to these illegally registered members and many of them subsequently defaulted. Officials also recorded that bank staff did not provide them with all member details for verification. “To facilitate the enlistment of illegal members, the board of directors’ minutes book has been corrected and even the signature of the president of the bank has been forged,” noted the investigator. A list of 54 of these members has been included in the report.
The disbursement of loans in excess of the Maximum Individual Borrowing Authority (IMBP) to members, a majority of whom are illegally registered, had been rampant since 2011. Huge sums had been transferred in the form of loans to members with IMBP scores. was well 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 review from the IMBP. All of them later failed.
Although the internal regulations limit the maximum amount that the bank can issue as a loan to Rs 50 lakh, the investigation revealed 279 loans exceeding Rs 50 lakh distributed by the bank over the past 10 years. Although routine audits have been carried out by the cooperation service, such manipulations have never been reported. The manipulation of the Gahaan document was another fraud detected in the loans disbursed on the basis of security of tenure. Gahaan is the online foreclosure system where the bank cedes land as loan collateral and this is communicated to the relevant village office. An outstanding Gahaan will refuse the owner’s certificate of possession and such land cannot be transferred to another person’s name.
This means that Gahaan will ensure that the pledged land is not sold or pledged elsewhere until the pending loan is settled. But at the Karuvannur bank, several defaulters had their Gahaan files erased while the repayment of lakhs was pending. Many had sold their property after obtaining the documents from the bank illegally.
The investigation also revealed that loans of huge sums were given to members who had not even requested them. The sums thus sanctioned were transferred from the accounts of the members to those of the conspirators using technical flaws in the software used in the bank.
