Kochi: The High Court of Kerala has ordered the Karuvannur Cooperative Society Bank to stop all payments to depositors until the government comes up with a roadmap, prioritising the repayment of deposits.
While issuing the order, Justice T R Ravi exempted payments for emergency purposes from the temporary ban but said it should be reported to the High Court. The Karuvannur Cooperative Bank has been at the centre of a multi-crore loan scam.
Observing that the deposits were being returned without any criteria, the court directed the government to seek ways to avail loans to tide over the crisis. It also sought the audit report of the bank and observed that a scheme should be drawn up to return the deposits.
The High Court issued the order while considering a petition by a group of depositors, who sought a directive to the bank to return their deposits. The petition would be considered along with other pleas, and it would be taken up for further hearing on August 10.
Special government pleader P P Thajudeen submitted that the government has been trying to avail loans from other financial institutions by mortgaging the bank's property. He also sought two weeks to submit the details of the government's efforts to solve the crisis.
The counsel for the bank, meanwhile, submitted that the institution currently has only Rs 60 lakh with it. The fixed deposits with the bank, as of July 31, were Rs 285 crore. Fixed deposits to the tune of Rs 142.7 crore have matured, and the bank has provided Rs 368.01 crore as loans.
The bank further informed the court that it was to get Rs 110.26 crore as interest on loans. As much as Rs 42.76 crore has been returned after the administrator has taken charge, it told the high court.