SRINAGAR: Two branches of Jammu and Kashmir Bank have flouted rules in disbursement of loans, the Comptroller and Auditor General (CAG) of India has said in its latest report.
According to the CAG, the JK Bank’s Panchkula branch in Haryana had sanctioned a term loan of Rs 1.90 crore and working capital of Rs 25 lakh in favour of M/S Shyam Dairy without verification of genuineness of its security. The lack of diligence, after the dairy was declared a non-performing asset, resulted in failure of recovering the amount paid.
As per the report, the residential house offered as security by the borrower was found to be mortgaged with another bank, which had taken its possession in another loan default case. Also, the report said, primary security like livestock, inventory, current assets were removed from the site when the site was assessed for the loan. The bank later lodged a complaint against the borrower with the police, but the first information report was not registered. The report said that the branch had released credit facility, along with the term loan, much before the start of the dairy’s operation, in violation of rules.
In another case, as per the report, the JK Bank’s cluster office in Jammu had released a loan to a borrower, Evergreen Dairy Farm Jammu. When the farm failed to pay the monthly instalment, the account was declared as a non-performing asset, prompting the branch to take possession of the mortgage. However, the revalue of the mortgage was found to be Rs 13.12 lakh less than the outstanding payment.
“The assets were re-valued by the bank and the total realizable value of the mortgaged assets was assessed at Rs 58.16 lakh, as against outstanding of Rs 71.28 lakh,” says the CAG report.
The report said that the JK Bank was investigating the violation of rules, and a recovery suit bad been filed against the defaulter party. The CAG had referred the matter to the government but it had not responded till October 2016.