SRINAGAR: The Jammu and Kashmir State Industrial Development Corporation (JKSIDCO), a state-owned company that grants loans to industrial units, has sanctioned a loan three times to a private company that has each time failed to repay.
The JKSIDCO granted the loan under the re-finance scheme of the Industrial Development Bank of India and the Small Industrial Development Bank of India.
According to the Comptroller and Auditor General (CAG) of India, Tramboo Joinery Mills (TJM), a private company, had first defaulted on the repayment of Rs 50 lakh that was disbursed as loan to the company in 1980 by the JKSIDCO. Nearly 30 years later, when the company failed to repay, the corporation settled the defaulter by waiving off accrued interest of Rs 3.7 crore.
Then, in 2008, the corporation granted Rs 30 lakh to the same company at the rate of one percent interest. Six years later in 2014, another Rs 3 crore loan was approved to the company for settlement of its liabilities on the recommendations of the Board of Directors of the JKSIDCO.
The CAG report says that the company has again defaulted repayment of the loans to the extent of Rs 1.04 crore as on April 2014, despite the fact that the loan amount was released from the corporation’s own resources amid surging losses that had accumulated to Rs 72.19 crore.
“Thus,” the report says, “imprudent decision by the company (JKSIDCO) to release soft loan out of own resources to a defaulter company for settlement of Non Performing Assets led to further default… (and) resulted in non-recovery of term loan.”
The amount was disbursed to the borrower company without obtaining valuation reports of all assets, a criteria mandatory for issuing the loan, said the report. The CAG has raised questions on the corporation’s justification on claims that the loan amount given to the defaulter company was fully secured and it was vigorously pursuing the recovery of its dues.
“The reply many be viewed in the light of the fact that the private company had previously defaulted in repayment of loan taken from JKSIDCO which was forced to settle the account under one-time settlement,” the report added.
The CAG had later asked the government about the matter, but the reply was still awaited by October 2016, the report added.