Consolidated fund worth Rs 500 cr: Kerala govt to rescue co-op banks reeling under financial crisis

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Karuvannur bank | Photo: Mathrubhumi

Thiruvananthapuram: The state government has decided to form a special consolidated fund for assisting the cooperative banks and primary agricultural credit cooperatives that are reeling under financial crisis, said Kerala minister for Cooperatives VN Vasavan.

The objective is to pool at least Rs 500 crore for the fund. The announcement comes at a time when financial crisis in cooperative sector are in limelight over the scam-tainted Karuvannur Cooperative Bank.

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The consolidated fund will be sourced from surplus fund and reserve fund of potent primary agricultural credit societies and cooperative banks based on a common agreement. The cooperative sector rules will be amended for the same, the minister informed.

The institutions will be reviewed before providing assistance. The institution should be facing financial crisis and at the same time it should be sure of overcoming it. Supervisory committees will be constituted at regional (cooperative divisions), district and state level to ensure proper usage of fund and repayment.

The minister pointed out that the Karuvannur Cooperative Bank will be the first to receive the allocation from the consolidated fund.

The government has also decided to intensify the operations of existing Kerala Cooperative Deposit Guarantee Fund Board. At present the Board provides a security of maximum Rs 2 lakh security for the investor if the cooperative entity concludes its operation. There is a plan to raise the maximum limit to Rs 5 lakh in special cases if investors are in crisis, the minister added.

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