Nishikant Khajuria
JAMMU, Mar 10: The Reserve Bank of India has pulled up the Citizens’ Cooperative Bank Ltd Jammu for systemic and loan policy deficiencies besides not adhering to the statutory norms under RBI guidelines.
According to a report, submitted by RBI after its annual financial inspection of CCBL Jammu with its financial position up to last Financial year, the bank has not complied with the RBI norms for maintenance of CRAR (Capital Resource Adequacy Ratio), IRAC norms, KYC/IAML policy, implementation of CCB, exposure limit on a borrower and implementation of CBS for branches.
The Inspection team has observed various deficiencies in the bank’s loan policy, which, as per the report, did not lay down any guidelines on takeover of accounts, procedure for valuation of securities as well as empanelment of valuers.
The credit appraisal of 120 loan accounts of different types revealed hundred percent systemic deficiencies and account specific deficiencies as there was no system of verifying the veracity of the personal statement made by borrowers and guarantors, no moratorium period and end use of funds, elaborates the report.
In some cases credit facilities were sanctioned or enhanced to borrowers without regard to their financial standing and business turnover resulting in disproportionate financial leverage with consequential financial risk and adverse effect on the future conduct of the accounts, RBI report adds.
Similarly, in the cases of Housing and Car loans, deficiencies were observed in respect of obtaining completion certificate to ensure end use of funds, inadequate assessment of repaying capacity of the borrowers and issuing Delivery Order in favour of the borrower even before receipt of formal loan application.
Observing that the delegation of powers vested with the General Manager and Managing Director at a very high level were not in consonance with financial health of the bank, the RBI has pointed out that the credit supervision of the bank was found lax with several irregularities.
“There was no periodic inspection of units to verify the assets and securities charged to the bank, CCBL branches were not obtaining stock/book debt statements from the eligible borrowers at prescribed intervals and valuation of security of mortgage property after three years was not done, particularly in case of NPA account,” explains the report.
Interestingly, the RBI inspection also revealed that the CCBL NPAs were much higher than reported by the bank. CCBL reported gross NPAs at Rs 3174.40 lakh as against Rs 3600.93 lakh assessed by the RBI inspection. The increase was on account of identification of fresh NPAs, re-classification of old NPAs resulting into additional provisioning requirement of Rs 92.94 lakh. Accordingly the net NPAs reported by the bank at Rs 1027.94 lakh (10.07 percent) were assessed at Rs 1454.47 lakh (14.25 percent) by the inspection team.
The Bank has no Board approved composite loan recovery policy resulting into fresh slippages of the accounts and poor follow up for recovery in respect of settled accounts, says the RBI.
Further, after taking into account additional provisioning requirements of Rs 102.17 lakh in respect of Gratuity shortfall, unrealized interest on fresh NPAs capitalized and the bank’s Provident Fund contribution portion, the RBI inspection has assessed the CCBL accumulated losses to the tune of Rs 808.23 lakh whereas the same was shown only Rs 706.55 lakh by the bank.
The RBI has also pointed several faults in the bank management affairs, such as no AGM since July 20, 2009, vertical split in the functioning of the Board with one group accusing the other of monopolizing the proceedings, no Board level Apex Audit Committee, creating post of GM without proper approval from RCS, no adequate training arrangements for the bank staff, no Board approved expenditure policy, etc.
Follow our WhatsApp channel