CPM-backed ‘Islamic banking’ cooperative society in Kannur collapses; depositors allege funds not returned

KANNUR: An Islamic banking venture started in Kannur under the leadership of the CPM, reportedly to bring the Muslim minority community closer to the party, has collapsed, with depositors alleging that they have not received back the money they invested years ago. Crores of rupees were reportedly collected from people in the name of interest-free banking.

The cooperative society, named Halal Faidah, was launched with the promise of providing interest-free financial services. Several depositors have alleged that they have not received the money they invested in the society nearly nine years ago.

A complaint seeking an investigation was submitted to CPM MLA T.K. Govindan, who has forwarded it to the Chief Minister.

The cooperative society was launched when P. Jayarajan was the CPM Kannur district secretary, with the support of the party leadership. Youth Commission chairman and DYFI leader M. Shajar was the chief promoter.

The society had promised to provide returns to investors through interest-free loans and businesses, including beef exports. Pinarayi Vijayan, who was the Chief Minister at the time, inaugurated the institution. The society initially operated from an office near Muthumariamman Temple on Sub Jail Road but was shut down soon afterwards. There is also a lack of clarity over the identities of its governing body members.

No records or accounts for deposits

An investor, K.P. Nasser, brought the issue to light, alleging that he had invested Rs 1 lakh in July 2017 but had not received either his investment or any share of the profits for years. He also alleged that depositors were not provided with records of the money collected or annual accounts.

Nasser said he repeatedly tried to contact chief promoter M. Shajar by phone but received no response. When he later visited the office, he found that it had been closed. Nasser later said he received his investment back after the issue became controversial. However, uncertainty remains over the investments of several other depositors. Shajar said he had no comments on the matter.

“The issue had been discussed several times earlier at meetings of the CPM Kannur district committee and secretariat. Although district leaders had demanded that the depositors' money be returned, no action was taken.”
-T.K. Govindan, MLA.