Karuvannur bank scam: Kerala govt plans auction of ₹128 crore ED-attached assets to aid depositors

The Cooperation Department will intervene to resolve the uncertainty surrounding properties attached by the Enforcement Directorate (ED) in the Karuvannur Cooperative Bank fraud case in Thrissur.

The department is preparing to issue an order allowing the Karuvannur bank to take over properties worth an estimated ₹128 crore that the ED is ready to hand over. The bank can then auction the assets and use the proceeds to repay depositors.

Action has already begun, while the office of the Cooperation Minister is also seeking legal advice on the matter. The department has been asked to submit a detailed report.

The ED attached properties worth ₹128 crore belonging to 53 people identified as accused in the fraud around two years ago.

The agency had approached the special PMLA court in Kochi two years ago, seeking to hand over the properties to the Karuvannur bank. The court subsequently sought the bank's opinion on taking over the assets.

At the time, the bank secretary informed the court that the bank could not take them over.

The ED renewed its efforts after the change of government in Kerala, but the bank again did not agree to accept the properties.

The Karuvannur bank had been placed under administrative control after its CPM-led governing committee was dissolved following the multi-crore fraud. However, the CPM won the subsequent election to the bank's governing body.

Among the properties attached by the ED is land purchased by the CPM's Porathissery local committee to build an office. According to the ED, the land was bought using money obtained through the fraud at the bank.

The agency has named the CPM as the 68th accused in the case. The fact that the party was an accused and one of its properties had been attached was among the key reasons cited by the bank's governing body for not taking over and auctioning the properties.

The bank had also raised other legal concerns over the proposed transfer.

The Congress-led government is now seeking to use the situation to help revive the financially distressed bank.

The Cooperation Registrar has the power to take action under Section 66 of the Kerala Cooperative Societies Act in cases involving troubled cooperative institutions. The department plans to invoke this provision in the Karuvannur case.

Under the proposed action, the Registrar will issue an order allowing the bank to take over the properties handed over by the ED and auction them.

The attached assets include ₹3.23 crore in cash, vehicles worth around ₹70 lakh, and several plots of land and buildings.

Although the attached properties have been assessed at around ₹128 crore, their actual value is estimated to be more than ₹250 crore.

The proposed auction could provide significant relief to depositors who have been waiting for their money to be returned following the fraud.

The Karuvannur bank fraud involved ₹324 crore. So far, ₹117.9 crore has been returned to depositors.

If around ₹200 crore can be raised through the auction of the attached properties, the amount could be sufficient to repay all remaining deposits, according to the plan.