This, according to an arrested militant Madoor Isubbu -- a person considered as a vital link in the terror groups-ISI- underworld-Naxals nexus, was aimed at keeping the flock of SIMI together after it was banned on February eight, 2006.

Sources privy to interrogation of Madoor, who was nabbed in Bangalore by police earlier this week on his return from a Gulf country, said ISI and other terror modules in Pakistan were worried over the depleting cadre strength of SIMI and were working out plans to keep them under one banner.

However, when contacted, Rizwan, PFI's Office Secretary, told PTI that this was a "wrong information" and the authorities were deliberately trying to "tarnish" the image of the organisation. He also distanced his group from the Kerala incident of chopping off the hands of a professor who had prepared a question paper allegedly insulting Islam.

SIMI cadres had earlier formed Wahadat-e-Islami which, however, could not sustain majority of its cadres who moved on to groups like Indian Mujahideen while some managed to shift to Pakistan through Bangladesh and some Gulf countries.

Madoor claimed before interrogators that funds were being pumped in by Pakistan's ISI for SIMI through hawala transactions from Gulf countries and it is also making attempts to woo Naxal groups, the sources said.

SIMI has since been banned thrice by the government and the organisation has lost its case in the Supreme Court seeking lifting of the ban.

36-year-old Madoor, a native of a village near Ullal in Dakshina Kannada district, was allegedly involved in over 17 criminal cases since 2001, including four murders, six attempt to murder, besides extortion and rioting.

He had been on the wanted list since 2003, when he jumped bail in two cases of communal rioting in Ullal and fled to Saudi Arabia, from where he began his operations using local associates in Mangalore, the sources said.

Madoor again figured on the radar of security agencies when a group of six people, suspected Naxal supporters, were arrested from Hyderabad and Bangalore for allegedly conspiring with him to build a base for ISI or underworld with the left wing extremists.

Police forces in Karnataka and Andhra Pradesh assisted by central security agencies had arrested four persons from AP and two from Bangalore. Rs 25 lakh meant for distribution to Naxals mainly in Andhra Pradesh was also seized from them.

According to sources, ISI had contacted underworld don Chota Shakeel, who is at present in Pakistan. Shakeel, wanted in many cases in India, got in touch with Madoor, alleged to be one of his touts and a resident in Karnataka, for establishing contacts with Naxals in these two states.

This is being seen as a fresh effort by ISI to take the help of underworld to pump in money for Naxalites.