CAG raps J&K Bank for lax attitude in loan recovery

CAG raps J&K Bank for lax attitude in loan recovery
 SRINAGAR: The Comptroller and Auditor General (CAG) has pulled up the Jammu and Kashmir’s  only listed company-J&K Bank- for its failure to initiate timely action in a doubtful recovery of Rs  1.19 crore and non-observance to monitor transactions of unusual pattern in favour of a borrower.
According to the CAG report 2016, the Bank’s Pulwama zonal office had sanctioned credit facility to the tune of Rs 67 lakh for one year in favour of M/s Farukh Enterprises Awantipora in 2009. The enterprise had mortgaged eight kanals of land situated at Midoora (Awantipora), Pulwama.
However after availing loan, the report said, the burrower failed to repay and maintain the account from September 2010, diverted the loan amount from one account to another and had not utilised it for the intended purpose.   “The bank declared the loan as non-performing asset on March 31, 2011 with outstanding balance of Rs 89.77 lakh and issued notice to the borrower and initiation of recovery proceedings under SARFAESI act 2002 in October 2013,” the CAG report said.
The report said that the bank came to know that the mortgaged land of the borrower was attached by the vigilance organization in June 2011as the land was purchased by the burrower out of the ‘misappropriated’ amount of land compensation during the years 2009-10.
“Prior to the sanction of loan the burrower had FDRs valuing Rs 1.60 crore in his name or related persons and the bank had failed to monitor the transactions of unusual pattern having no apparent economic purpose,” reads the report.
“The recovery proceedings were initiated under SARFAESI Act 2002 which was not enacted by the state government and the bank had not initiated any action for recovery of dues from October 2010 to October 2013,” the report added.
The CAG report quoting Bank’s reponse that it has followed due norms in the case has expressed dissatisfaction over it that it has neither monitored transactions of unusual pattern and nor initiated timely action for recovery dues from the borrower.
 Although the bank has filed a civil recovery suit in a civil court, but the report said, the Bank’s reply should be viewed in light of the transactions of misappropriated amount of land being of unusual pattern with no apparent economic purpose had passed through the bank accounts of the borrower.

 

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