Kerala: CPI(M)-backed Islamic banking society under scrutiny as complaints mount

A financial headache is brewing for depositors of a Shariacompliant cooperative society promoted by CPIM leaders in Kannur with complaints surfacing that some depositors have been unable to withdraw their moneyKerala Chief Minister VD Satheesan has assured that the complaints will be investigated news agency IANS reportedHowever in a development that adds a twist to the controversy Nassar one of the depositors who had openly raised the issue has now said that his Rs 1 lakh deposit has been returnedHe had earlier said that repeated attempts to recover the money had failed and that he had been unable to get a response from M Shajar the key promoter of the institutionldquoI tried calling Shajar but he is not answering the call I have no other option but to seek redress through legal meansrdquo Nassar had saidDepositorsrsquo complaints reach Kerala governmentThe issue came to the governmentrsquos notice on Thursday after TK Govindan the MLA from Thaliparamba handed over complaints from depositors in the Mayyil area to Chief Minister SatheesanGovindan said several complainants had approached him after facing difficulties in getting their deposits backldquoAfter going through the complaints I submitted the Chief Minister said that a probe would be launchedrdquo Govindan saidGovindan also said he was aware that concerns over the institution had first surfaced in the Mayyil CPIM unit and were subsequently discussed before the Kannur district CPIM committeeIssue gains political significanceThe issue assumes political significance as Govindan was himself a prominent CPIM leader in Kannur until the recent Assembly electionHe contested Thaliparamba as an Independent after the party decided to field the wife of State CPIM Secretary MV GovindanWith the Congressled UDF supporting him Govindan secured a notable victoryHalal Fayida Cooperative Societyrsquos CPIM linksHalal Fayida Cooperative Society a Shariacompliant financial institution was inaugurated by then Chief Minister Pinarayi Vijayan in Kannur on December 24 2017 in the presence of senior CPIM leaders from the districtM Shajar a prominent CPIM leader who rose through the partyrsquos youth wing was its chief promoterThe institution had its roots in the CPIMled effort to promote Islamic banking in KeralaIslamic banking proposal faced RBI objectionsThe LDF governmentrsquos earlier attempt to establish an Islamic bank during 200611 had faced objections from the Reserve Bank of India which maintained that the proposal was inconsistent with existing banking lawsThe initiative was subsequently pursued through a cooperative society structure outside the direct regulatory framework governing conventional banksPrimary cooperative societies operate under the state cooperative system although many accept public deposits and provide loansThe model was projected as a means of bringing people seeking Shariacompliant financial arrangements into the formal financial systemProbe to examine wider financial concernsWhile Nassarrsquos Rs 1 lakh has now been returned complaints from other depositors have brought the institution back into the political spotlightThe proposed probe will now have to establish whether the difficulties faced by depositors are isolated instances or point to a wider financial problemFor the CPIM particularly its Kannur organisation the controversy is an uncomfortable reminder of an initiative once promoted with considerable political backingWith IANS inputs