Karuvannur scam effect: RBI calls emergency meeting of representatives from Urban Co-op banks

Thiruvananthapuram: While scam-hit Karuvannur Cooperative Bank continues to create headlines, the Reserve Bank of India (RBI) has finally decided to address problems faced by the cooperative sector in the state.

The central bank will closely examine the ongoing investigation by the Enforcement Directorate (ED) and the allegations of money laundering linked to cooperatives in the state. 

RBI has scheduled an emergency meeting of representatives from Urban Cooperative Banks under its control in Kochi on Friday. The focus of the meeting is to seek input from Urban Bank representatives on the issues. Further action will be decided based on this.

The RBI will examine the transactions of urban banks in the wake of the scam at Karuvannur Bank. The central bank will investigate whether there are any connections between urban banks and state-run cooperative banks. The meeting was also called at a time when the ED discovered that two urban banks had financial dealings with Karuvannur Bank.

The Market Intelligence unit of the Reserve Bank has also been providing timely reports on the issues in Kerala. 

Because the RBI does not control primary cooperative service society banks in the state, it cannot intervene directly in existing challenges. Previously, the RBI cautioned that cooperative banks in Kerala were functioning without their approval and that they should be monitored.