Ajayan

Inasu (74), a retired government employee, liquidated his fixed deposit of Rs 10 lakh with a co-operative bank in the outskirts of Thrissur town two days ago and deposited it in a Thrissur-based scheduled bank. He candidly admits that a disquiet has rippled the cooperative financial landscape, and with the events that transpired in Karuvannur, he feels none will take a risk with the cooperative sector.

Inasu is among the numerous who have started withdrawing their deposits from various co-operative banks across the State. The State’s cooperative banking sector commands an impressive share of 40 per cent in the banking business and its deposits run to over Rs 2.5 lakh crore.

Issues in a few coop banks in Thrissur and one in Thiruvananthapuram after the great Karuvannur bank ‘robbery’ to the tune of at least Rs 500 crore, as sources close to the sector claim, have created a fear among depositors which can spell doom for the formidable cooperative sector which has had a major role in Kerala economy.

The inept handling of the crisis by the authorities become painfully evident through the sentiments voiced by another depositor who said he would safeguard his liquidated asset beneath his pillow. Asked if he had no fear of thieves, his reply was an indictment of the prevailing conditions. In the event of a theft and the thief apprehended, there is hope of receiving at least a good part of the stolen amount – a stark contrast to heartbreaking tragedy in Karuvannur where people faced demise due to their inability to access their deposits, essential for meeting their critical hospital expenses.

Those well-versed in the intricacies of the sector assert that the arrival of the Enforcement Directorate to probe the Karuvannur bank deals and expand their search to other institutions within Thrissur district, has precipitated the frenetic daily procession of depositors, in a sort of collective exodus, to withdraw their deposits and daily withdrawals span a range of Rs 5 crore to Rs 10 crore.

Some banks in neighbouring Palakkad which have remained stable and have never undertaken deposit mobilization campaigns are now victim to this emerging withdrawal phenomenon of Rs 1 crore to Rs 2 crore daily over the last 10 days.

Insider insights from the Kerala Bank, the apex bank, entrusted with securing a portion of the primary cooperative bank deposits, show that they put strains on the institution. The escalating clamour for withdrawals has put Kerala Bank under financial duress that may even affect its foundations.

Scheduled banks in the area are said to have discreetly extended overtures to the beleaguered cooperative bank depositors with offers to accommodate their deposits as a safe harbour.