Kochi: The Kerala High Court has ordered the Karuvannur Cooperative Society Bank to halt all payments to depositors until the government comes up with a roadmap, prioritizing deposit repayments.
When issuing the order, Judge TR Ravi exempted payments for emergency purposes from the temporary ban, but said it should be reported to the High Court. Karuvannur Cooperative Bank was at the center of a multi-crore loan scam.
Observing that the deposits were returned without any criteria, the court ordered the government to seek ways to obtain loans to overcome the crisis. He also asked for the bank’s audit report and observed that a plan needed to be developed to return the deposits.
The High Court issued the order as it considered a petition from a group of depositors, who were asking the bank to return their deposits. The petition would be considered through other means and would be taken up for a new hearing on August 10.
The government’s special litigator, PP Thajudeen, argued that the government was trying to obtain loans from other financial institutions by mortgaging the bank’s assets. He also asked for two weeks to submit details of the government’s efforts to resolve the crisis.
The bank’s lawyer, meanwhile, argued that the institution currently only has Rs 60 lakh with it. Fixed deposits with the bank, as of July 31, were Rs 285 crore. Fixed deposits amounting to Rs 142.7 crore came due and the bank provided Rs 368.01 crore in loans.
The bank further informed the court that it was to obtain Rs 110.26 crore as interest on the loans. As much as Rs 42.76 crore was returned after the administrator took over, he told the High Court.