Thrissur: The scam-hit Karuvannur Service Cooperative Bank's loan outstanding has rocketed to Rs 514 crore even as its deposit has plummeted to Rs 282 crore, said a top official.
Since 2016-2017, the CPM-controlled society has been giving out more loans than the money it has been raising in the form of deposits, with its credit-deposit ratio hovering around 107% on average. But now the C-D ratio is 136%. A healthy C-D ratio would be around 70% to 80%, said P K Chandrasekharan, chairman of the government-appointed administrative committee that runs the bank now.
The committee took charge on July 31, 2023, after the government disbanded the board of directors of the bank which saw a few employees and politicians joining hands to siphon around Rs 125 crore from the society. The Directorate of Enforcement (ED), which arrested four persons including a CPM councillor in connection with the case, called the scam an organised crime in its remand report.
The bank's deposit peaked at Rs 402 crore in 2018-2019, and plunged by 13% to Rs 350 crore in 2019-2020, when people started getting the whiff of the scam. It fell a further 6% to Rs 330 crore in 2020-2021. Now the deposit stood at Rs 282 crore.
The money belonged to 23,648 small depositors, said Chandrasekharan. Giving a breakup, he said 18,862 members had deposits worth Rs 10,000 and less; 2,338 members had deposits between Rs 10,000 and Rs 50,000; 905 members had deposits between Rs 50,000 and Rs 1 lakh; and 1,543 members had deposits above Rs 1 lakh.
But even when the deposits were falling, the bank's loan outgo saw a steady rise.
Chandrasekharan said the bank had given loans worth Rs 385 crore. "With interest, we have to get back Rs 514 crore," he said. Of that, he estimated Rs 103.3 crore to be bad loans.
It could be an understatement. In August 2022, the Thrissur Joint Registrar of the Department of Cooperation submitted a report seeking to recover Rs 113 crore from the three employees and 20 directors and president of the bank who served from 2011 to 2016 and from 2016 to 2021.
In 2021, the bank's new secretary in-charge Sreekala E S filed a police complaint saying her predecessor Sunil Kumar T R, former branch manager Biju M Kareem, accountant Jilse C K, bank member Kiran P P, commission agent Bijoy A K, and Reji Anil, the accountant of the bank's supermarket swindled around Rs 100 crore.
The joint registrar who inquired into the scam said in his report that a huge number of loans were given to ineligible members based on fake addresses and without securing the collateral and based just on reports filed by manager Biju Kareem.
Multiple loans were also sanctioned on the same properties and on properties already pledged with the bank without the knowledge of the owners.
The ED in its remand report said the employees renewed the bad loans on the computer in March without the presence of borrowers.
The employees in the loan section told the ED that loans were always transferred to accounts that did not belong to the borrower and they did it on the instructions from the head office.
"When a scam like this hits a bank, people will lose trust in the bank. The falling deposits at Karuvannur are a measure of that. Genuine borrowers will also not be prompt in paying back their loans. So till the bank gets back the money, all of it should be seen as bad debt," said a manager of a scheduled bank, headquartered in Thrissur.
Administrative Committee Chairman Chandrasekharan alleged political rivals also ran a door-to-door campaign in Karuvannur telling borrowers not to repay loans. "But we are hopeful of reviving it," he said.
He said Karuvannur bank has started giving gold loans at an 8% interest rate. "Even scheduled banks cannot match our rates and people are coming forward to take loans," he said. In the two months since the new Administrative Committee has taken over, the bank has given Rs 2 crore worth of gold loans, he said. The bank's total gold loan stood at Rs 4.37 crore, he said.
To be sure, the gold loan was always less than 2% of Karuvannur bank's business. In August 2021, its gold loan business was only Rs 6.64 crore, when the total loan outstanding was Rs 376 crore.
The manager of the scheduled branch quoted above said an 8% interest rate for a gold loan was a desperate move to do some business. "Schedule banks offer interest rates of more than 8.5%," he said.
Velayudhan T C (70), an old-time member who has Rs 15.73 lakh in the bank, said 8% on a gold loan did not make sense when it was offering him 8% for his fixed deposit.
Chandrasekharan said the bank has disbursed Rs 73.6 crore to depositors in the past six months. He said the bank got Rs 10.6 crore from the consortium of Primary Agricultural Cooperative Credit Societies (PACS); Rs 2 crore from its Reserve Fund deposited with Kerala Bank and Rs 5 crore from the government's Risk Fund Board. "We will get another Rs 5 crore from it," he said.
He said the bank was returning 10% of the fixed deposits (up to Rs 5 lakh) that have matured and half of the interest to customers. Those who do not come forward to claim it are given full interest every three months, he said.
Apart from that, the bank has disbursed Rs 12.57 crore as emergency funds to members for education, medical treatment, and wedding.
But Velayudhan, whose son is getting married on October 22, said only the nears and dears of party leaders were getting money. "The bank is neither giving me my principal amount or interest. I am getting tired of going to the bank," he said.
