Thiruvananthapuram: The Enforcement Directorate (ED) has unearthed a scam of over ₹50 crore at the Nemom Service Co-operative Bank in Thiruvananthapuram, Kerala. The ED's Kochi Zonal Office initiated an investigation under the Prevention of Money Laundering Act (PMLA) based on 24 FIRs registered by the Kerala Police. The FIRs accused the bank's Managing Committee of misappropriating public funds and failing to return deposits collected from the public, causing significant financial loss to depositors. The offences were registered under Section 420 of the Indian Penal Code and Section 318(4) of the Bharatiya Nyaya Sanhita, 2023, which are scheduled offences under the PMLA, 2002.
Genesis of the Case The ED's investigation was triggered by multiple FIRs filed by the Kerala Police, alleging that the bank's former Managing Committee had engaged in large-scale misappropriation of public funds. These funds were collected as deposits from the public, who were subsequently unable to withdraw their savings.
Depositors' Woes Statements from depositors recorded under Section 50 of the PMLA revealed that they were denied withdrawals despite repeated requests. This raised concerns about the financial management and decision-making of the then Managing Committee. Further investigation revealed serious procedural violations, including the acceptance of deposits and sanctioning of loans in contravention of the Act, rules, and circulars.
Registrar's Report A final report dated August 8, 2025, from the Registrar of Co-operative Societies indicated a misappropriation of funds to the extent of ₹50 crore. The report also revealed the creation of forged documents, sanctioning of loans beyond permissible limits, diversion of funds, and overall financial mismanagement. This led to the bank's failure to honour its deposit liabilities.
ED Raids On November 7, 2025, the ED conducted coordinated search operations at five premises associated with the bank's functionaries and concerned individuals in Thiruvananthapuram. A substantial number of manual records were recovered from the bank premises. The agency seized certain fake Fixed Deposit certificates created in the name of an individual, which were used to avail significant loans from the bank and another financial institution. Hard disk data relating to depositors and defaulted loan accounts was retrieved for forensic examination. The ED also seized various incriminating documents, property-related papers, and 15 original fixed deposit receipts valued at approximately ₹50 lakh.
Modus Operandi The investigation revealed that the bank had extended loans worth ₹34.26 crore, backed by collateral of only ₹15.55 crore. Of the ₹10.73 crore collected under the Monthly Investment Scheme, only ₹4.83 crore remained in the bank's accounts. Many loans were sanctioned to individuals who were not bank members and without adequate guarantees. It was also learned that 380 criminal cases have so far been registered in relation to the bank scam, of which 368 have been transferred to the State Crime Branch for further investigation.
Political Implications The discovery of the scam has triggered political attention, especially with local body elections approaching in Kerala. The bank, which was earlier controlled by a CPI(M)-led panel, is currently under an administrator. The ED's intervention follows growing protests by investor groups demanding restitution of deposits and stricter oversight of Kerala's cooperative banking sector, which has faced mounting allegations of political interference and mismanagement.
Ongoing Investigation The ED is intensifying its probe to trace the proceeds of crime. The agency is also investigating the role of former office-bearers in forging documents, sanctioning loans beyond permissible limits, and diverting funds. The ED is taking all earnest efforts permitted by law to restore the properties of the persons or claimants with a legitimate interest in the property, who may have suffered a quantifiable loss as a result of the offence of money laundering. The investigation is ongoing, and further details are expected to emerge as the ED delves deeper into the financial irregularities.
