Kochi/Thrissur: The Kerala government on Wednesday assured the high court that it will compensate all the depositors who have lost their savings in the Karuvannur Cooperative Bank scam.

The state government told the high court that it will avail of loans from various sources, including the Kerala Bank, to repay the depositors.

A high power committee led by Cooperative Minister V N Vasavan had discussed ways to find a solution to the crisis. At the meeting, it was decided to reinstate the facilities for repayment and pay back full amount due to the depositors, the government said.

The court asked the government to explain the proper procedures to pay back the customers the money they had deposited. Loans to the tune of Rs 50 crore will be availed of by mortgaging the assets of the bank, the government informed the court.

The government sought 12 days to fix the priority of the depositors to repay the amount. The court will now hear the case after 12 days.

The case came up before the court even as the Enforcement Directorate (ED) sleuths from Kochi carried out raids at locations linked to the accused in the Rs 300 crore bank scam.

Sources in the ED told PTI that searches were conducted simultaneously at the residences of all the five accused in this district.

The action comes at a time when the agitated depositors are on a warpath against the management of the ruling CPM-controlled Karuvannur Cooperative bank, located at Irinjalakuda, demanding return of their investment.

The Opposition Congress had recently urged Chief Minister Pinarayi Vijayan to hand over the investigation into the Cooperative bank scam to CBI, alleging that there was not much progress in the ongoing probe by the state agencies. After a brief interval, the bank again sparked a controversy last month over the death of a woman depositor, whose family had alleged that she was denied money for advanced treatment by the management despite having lakhs of rupees as deposit in the bank. They also staged a protest in front of the bank with the woman's body, following which opposition parties came out against the ruling CPM.

The loan scam was reported in the bank, located in Thrissur district, in July 2021, following which a case was registered against six bank officials and an inquiry launched. After several people including local customers raised apprehensions about the bank's functioning, an audit was conducted there recently, in which the charges were reportedly found to be true. During the inspection, it was also found that loans were sanctioned on the property pledged by local customers without their knowledge and the loan amount was credited multiple times to the select account. Following allegations, the 13-member committee of the Marxist party-ruled bank was disbanded.

(With inputs from PTI)