**Executive Summary**
This document is an answer provided by the Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, to Unstarred Question No. 1576 in Lok Sabha, dated 09 February 2026, regarding the Karuvannur Service Cooperative Bank scam and other scams in cooperative banks in Kerala. The response clarifies the regulatory oversight of cooperative banks and details the actions taken by central agencies, including the Enforcement Directorate (ED). It also provides information on the total amount of frauds outstanding as of December 31, 2025, in cooperative banks under NABARD's supervision in Kerala.
**Key Points / Main Content**
* **Regulatory Oversight:**
* Rural Cooperative Banks are regulated by the Reserve Bank of India (RBI) and supervised by the National Bank for Agriculture and Rural Development (NABARD).
* Urban Cooperative Banks are regulated and supervised by the RBI.
* Karuvannur Service Cooperative Bank is a cooperative society registered under the Kerala Cooperative Societies Act, 1969 and is under the regulation and supervision of the Registrar of Cooperative Societies, Government of Kerala. It does not have a banking license from the RBI and does not fall under RBI's regulatory purview.
* **Enforcement Directorate Action:**
* The Enforcement Directorate (ED), Kochi Zonal Office, has provisionally attached assets worth Rs.10.98 crore of various individuals under the Prevention of Money Laundering Act (PMLA), 2002, as part of an investigation into the Karuvannur Service Co-operative Bank fraud case.
* **Fraud Data (as of December 31, 2025):**
* Kerala State Cooperative Bank: 370 frauds with a total outstanding amount of Rs. 9.80 crore.
* Malappuram District Central Cooperative Bank: 5 frauds with a total outstanding amount of Rs. 1.43 crore.
**Impact Analysis**
**RBI**
* **Impact:** The document outlines the RBI's regulatory and supervisory roles over Rural and Urban Cooperative Banks, clarifying the extent of its jurisdiction. The RBI is not responsible for Karuvannur Service Cooperative Bank as it is not licensed with them.
* **Action Required:** No direct action is required from the RBI based on this document.
**NABARD**
* **Impact:** NABARD's role in supervising Rural Cooperative Banks is highlighted. The document presents data regarding fraud cases under its supervisory purview.
* **Action Required:** No direct action is required from NABARD based on this document.
**Registrar of Cooperative Societies, Government of Kerala**
* **Impact:** The document clarifies the Registrar's role as the regulatory body for the Karuvannur Service Cooperative Bank.
* **Action Required:** No direct action is required from the Registrar of Cooperative Societies based on this document.
**Enforcement Directorate (ED)**
* **Impact:** The document acknowledges the ED's involvement in investigating the Karuvannur Service Co-operative Bank fraud case and provisionally attaching assets.
* **Action Required:** Continue investigation into the Karuvannur Service Co-operative Bank fraud case.
**Ministry of Finance**
* **Impact:** The document is a direct response to questions raised in Lok Sabha, indicating the Ministry's role in addressing concerns about cooperative bank scams.
* **Action Required:** No direct action is required from the Ministry of Finance based on this document.
**Depositors/Public**
* **Impact:** Those with accounts in the affected Cooperative Banks, especially Karuvannur Service Cooperative Bank
* **Action Required:** None. This document is for reporting/ information purposes only.
Key Entities Referenced
Karuvannur Service Cooperative Bank: A cooperative society registered under the Kerala Cooperative Societies Act, 1969, involved in a fraud case.
Prevention of Money Laundering Act (PMLA), 2002: Act under which assets were attached as part of the investigation into the Karuvannur Service Co-operative Bank fraud case.
Reserve Bank of India (RBI): Regulates Rural and Urban Cooperative Banks. Karuvannur Service Cooperative Bank does not have a banking license from RBI and hence does not fall under the regulatory purview of RBI.
National Bank for Agriculture and Rural Development (NABARD): Supervises Rural Cooperative Banks.
Kerala Cooperative Societies Act, 1969: Act under which Karuvannur Service Cooperative Bank is registered.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
LOK SABHA
UNSTARRED QUESTION NO. 1576
ANSWERED ON MONDAY, 09 FEBRUARY, 2026/ 20 MAGHA, 1947 (SAKA)
Karuvannur Service Cooperative Bank
1576. SHRI N K PREMACHANDRAN:
Will the Minister of FINANCE be pleased to state:
(a) whether the Union Government has initiated any action against the major scam which
involved large scale irregularities in the Karuvannur Service Cooperative Bank and such other
major scams in the Cooperative banks in Kerala, if so, the details thereof;
(b) whether the Union Government proposes to initiate any action for repayment of money
deposited in those banks, if so, the details thereof and the action taken thereon;
(c) whether the Central agencies conducted investigation regarding cooperative banks scams
in the said State, if so, the details thereof;
(d) whether the Central agencies attached assets of the banks or bank Board of Directors or
bank employees, if so, the details thereof; and
(e) whether the Union Government has analysed the large scale scam in cooperative sector in
the said State and if so, the details and the number of banks in which such scams have been
reported?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) to (d): The Rural Cooperative Banks are regulated by the Reserve Bank of India (RBI) and
are supervised by National Bank for Agriculture and Rural Development (NABARD) while
Urban Cooperative Banks are regulated and supervised by the RBI. However, Karuvannur
Service Cooperative Bank is a cooperative society registered under the Kerala Cooperative
Societies Act, 1969 which is under regulation and supervision of Registrar of Cooperative
Societies, Government of Kerala. Hence, the said entity is not a bank as it does not have a
banking license from RBI and hence does not fall under the regulatory purview of RBI.
As per press releases of the Enforcement Directorate (ED), Kochi Zonal Office of ED has
provisionally attached assets worth Rs.10.98 crore of various individuals under Prevention of
Money Laundering Act (PMLA), 2002 as part of investigation into the Karuvannur Service
Co-operative Bank fraud case.(e) As informed by NABARD, the total amount of frauds outstanding as on 31st December
2025 in cooperative banks under its supervisory purview in the State of Kerala are as under:
Name of Bank Number of Amount Outstanding
Frauds (in ₹ crore)
Kerala State Cooperative Bank 370 9.80
Malappuram District Central Cooperative Bank 5 1.43
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