Evoked by Karuvannur bank scam, Kerala cooperative sector gears up to amend laws

Thrissur: Considering the suggestion of the nine-member panel constituted to study about Karuvannur bank scam, the government has decided to amend cooperative sector laws. With this, professional directors will be appointed in all cooperative banks in Kerala. Notably, all banks under RBI are supposed to have professional directors.  

At present professional directors are only appointed at urban cooperative banks and district cooperative banks. Those individuals qualified in financial and IT related matters are appointed as professional directors. Two professional directors will be appointed under each administrative committee.

Meanwhile, the objective of the new amendment is to avoid the chances of malpractices in the valuation of items pledged for granting loans. It is learnt that items are overvalued many times while in some cases loan is sanctioned over the same item.
It is pertinent to note that such practices were evident in the Karuvannur bank scam.

Presently, the loan applications are approved on the basis of examination and valuation of item/items by the director board and secretary. With the appointment of professional directors, they will take the decision on approving the loans.