Page 21 - Banking Finance December 2023

Co-Operative Bank

News

ED apprehends the former CM Siddaramaiah says and he promised to write to NABARD
and Prime Minister Narendra Modi to
KPCC general secretary in Karnataka will think about put this into effect.
a cooperative bank fraud putting government money

case in cooperative banks. RBI sets guidelines for
The former general secretary of the The government would look into the DCCB branch closures.
Kerala Pradesh Congress Committee possibility of parking public funds in According to the RBI, District Central
(KPCC), KK Abraham, has been placed cooperative banks as opposed to na- Co-operative Banks are free to close
under custody by the Enforcement Di- tionalized institutions, according to their unpaid branches without first
rectorate (ED) in connection with a Chief Minister Siddaramaiah. obtaining approval from the central
suspected loan scam that occurred The chief minister delivered the bank; however, approval from the
while he was the president of a coop- speech at the All-India Convention on state's Registrar of Cooperative Societ-
erative bank in the Wayanad district. Cooperation's valedictory at ies is required. According to a circular
Official sources have revealed that Vijayapura, where his Cabinet col- from the Reserve Bank of India, the
Abraham was arrested in relation to the leagues were present. Board should decide whether to close
Pulpally Service Cooperative bank scam. The CM said, "Cooperative banks branches only after considering all per-
Then, as previously stated, he was should be stable." They could only lend tinent information and after ensuring
taken before a judge; no other infor- to farmers after that. "Farmers will be that the meeting's proceedings are
mation was given. more productive if they receive loans accurately documented.
on time." After his government waived
During Abraham's term as the head of "The bank should give two months
the bank's governing council, multiple farm debts up to Rs 50,000 during his notice in advance to all existing deposi-
previous term as chief minister and
claims of financial irregularities compensated them for it, cooperative tors/clients of the branch through
prompted the ED to begin an inquiry. press release in local leading newspa-
banks grew stronger.
According to official sources, Abraham According to Siddaramaiah, the gov- pers as well as communicate to each
is charged with conspiring with a per- ernment was now offering interest- constituent of the branch, well in ad-
son going by the name of Sanjeevan to free loans of up to Rs 5 lakh, while vance of the closure of the branch," it
make fraudulent loans to siphon off stated.
during his previous administration,
bank funds totaling more than Rs 5 loans of up to Rs 3 lakh were available Additionally, the District Central Coop-
crore.
at a subsidized 3% rate of interest. The erative Bank (DCCB) needs to give the
The victims had asked for a probe into chief minister claimed that the govern- relevant Reserve Bank Regional Office
the scam from the Enforcement Direc- ment ought to be able to provide loans the original license or licenses granted
torate (ED). up to Rs 15 lakh at a 3% interest rate, for the closed branch.

BANKING FINANCE | DECEMBER | 2023 | 19