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| JK Bank violates OTS: CAG | | `Loses Rs 19 Cr' | | Early Times Report
Jammu, Apr 30: The Jammu and Kashmir Bank has been indicted by the Comptroller and Auditor General (CAG) of India for violation of guidelines of One Time Settlement (OTS) sacrificing Rs 19.41 crores due to settlement of non-performing assets (NPA) of a Kashmir business house.
The CAG report for the year ending March 2011 said that the Bank sacrificed Rs 19.41 crores due to settlement of Rs 43.50 crores of non-performing assets (NPA) for a loan of Rs 45 crores to Hassan Sons.
"J&K Bank sanctioned return loan of Rs 45 crores in favour of Hassan Sons for acquisition of land measuring 940 kanals (over 117 acres) and development of a housing colony at Zapora-Naseem Bagh area in Srinagar city against preliminary security of hypothecation of all material and machinery at site, collateral security of land valued not less than Rs 50 crores and personal guarantee of all partners of the firm", the CAG report said.
The loan, to be repaid completely during 2008-09, could not be disbursed in favour of the borrower as the firm did not have a clear title over the land offered as a collateral oral security and the sanction lapsed, the report said.
The Bank subsequently revalidated the sanction in November 2005 and accepted another land valuing Rs 33 crores, it said, adding, the bank released Rs 45 crores in December 2005.
The audit observed that despite lapse of two and a half years the borrower neither executed the project nor repaid the loan, suggesting that the borrower was a wilful defaulter.
On turning the account regular, the bank classified in its June 2008 account as NPA with outstanding balance of Rs 45.92 crores as principle amount and Rs 16.99 crores unpaid interest, the report said.
Within one year of turning the account NPA, the bank settled in May 2009 the NPA account under OTS for an amount of Rs 43.50 crores in contravention of the prescribed guidelines of OTS, thereby sacrificing Rs 2.42 crores principle amount and Rs 16.99 crores unpaid interest, the CAG report said.
Besides, the bank has not taken over or realized the collateral security and instead settled the case under OTS in violation of the guidelines, it said.
The management of the bank stated in August 2011 replying to a query that the case has been settled under the Bank's compromise, remission scheme considering all aspects of the case, it said.
"The reply is not tenable as the settlement under the OTS scheme was preferred against taking over mortgaged securities having ignored the interest of the bank to the extent of Rs 19.41 crores, besides violating the prescribed guidelines of OTS scheme", CAG said. |
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