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| CAG indicts JK Bank for losses, undue favour to State govt | | | early times report
Jammu, Apr 4: Comptroller and Auditor General (CAG) in its report had come down heavily on the functioning the J&K Bank, the preimer financial institution of the State.
The report has come at a time when bank has under scanner in the recent J&K Cricket Association scam and PDP has alleged that State government is using Bank as its personal property.
The report said the credit deposit ration(CDR) of the bank has declined from 69 to 59 percent. This concern was expressed none other than RBI Governor during his visit to the State.
The CAG report says that J&K Bank lacked in monitoring credit facilities.. The percentage of Non Performing Assets(NPA) ranged between 2089 to 1.95 between 2006-11.
In the course of settlement of loan cases under One Time Settlement(OTS) the bank had ended up sacrificing principal amount of Rs 33.35 crores and Rs 147 crores towards interests during the period 2006-11.
In the priority sector, the bank's achievement under agriculture sector has been dismal. The report says consequent upon shortfall of targets on this account, the Bank had to invest Rs 2862 crores in low yielding- interest rate off three to six percent per annum- rural infrastructure development fund for a period of three to seven years leading to loss of interest to the tune of Rs 344 crores.
The bank hadn't been able to recovered NPA under priority sector, leading to increase in NPA level by Rs 214 crores to Rs 312 crores during 2006-11.
The CAG report further says that Bank hadn't been able to achieve the targets under centrally/ state sponsored schemes leading to tardy implementation of these schemes.
The bank had decided (July 2007) to raise additional capital of Rs 700 crores by way of issue of American/ Global Depository Receipts (A/GDRs). Since raising of additional capital necessitated raising of corresponding shareholding of the State government, the bank issued-2008- convertible warrants on preferential basis to the government to be converted into shares on the date of allotment of shares or within the 18-month , for which the State government deposited (2007) Rs 28 crores-10 percent advance by way of warrants- .
The report says the bank decided in March 20089 to postpone the issuance of GDR and by the time the decision was taken, the bank has incurred an expenditure of Rs 1 crore which was rendered wasteful. Not only that the Bank compensated state government for the whole amount of Rs 28 crores, there by extending undue favour to the State government.
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