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Priya Nair

Mumbai, Aug. 8 Even as the Government is gearing up to disburse the first tranche of farm loan reimbursement by September 30, banks are facing a new problem, which could delay the entire process.

Under the current guidelines, banks are not allowed to get any reimbursement until the final claims list is audited by a central statutory auditor. But the fees for the statutory auditors are huge and banks will have to pay before they get the money from the Government. And the audit may also take time, said a banker.

The Indian Banks’ Association has taken up the issue with the Government as well as the Reserve Bank of India after it was discussed at its management committee meeting on July 29, said an official from IBA.

According to the RBI guidelines, banks have to get 20 per cent of the accounts audited by the central statutory auditors, in order to get the reimbursement. However, the RBI guidelines do not make any mention of auditors’ fees. According to an official from a leading public sector bank, some auditors are asking for fees as high as Rs 15-20 per account, which could run into large amounts for some banks.

Statutory auditors may even insist on visiting bank branches, the official added, which could delay the finalising of the claims list. IBA has asked for the fees to be fixed at Rs 10 an account, after considering the large number of accounts with each bank, said the official.

IBA has also suggested that the Government release the first phase of reimbursement, which is 32 per cent of the claims, by September 30, according to the schedule, while banks could get their lists audited along with their full-year results by March 2009. This will save banks from the additional strain of auditing, said the official.

However, according to sources, State Bank of India, the largest bank with about 35 lakh accounts under the debt waiver scheme, has managed to get the auditors for a fee of about Rs 70-80 lakh.

More Stories on : Farm credit | Auditing

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