Mandatory review being conducted to check for lapses

The Ministry of Finance and Reserve Bank of India have asked banks to submit a report on the Rs 52,000-crore agricultural relief and debt waiver scheme, 2008.

In its report tabled in Parliament last week, the Comptroller and Auditor General (CAG) had pointed out serious lapses in the implementation of the scheme.

As key implementing agencies, banks and other lending institutions’ role has now come under the scanner and banks are busy re-scrutinising the list of beneficiaries. When contacted, K. Subrahmanyam, Executive Director, Union Bank of India, told Business Line that banks have been given 30 days to submit the report.

“All guidelines were followed in implementing the scheme. Nevertheless, we are conducting a re-check,’’ he said.

Stating that only some ‘aberrations’ were pointed out by the watchdog of public expenditure, M. Narendra, Chairman and Managing Director of Indian Overseas bank, said: “We have done very few transactions but are conducting a mandatory review like all other banks.’’ The National Bank for Agriculture and Rural Development (Nabard) has also received instructions for a review. “Cooperative credit institutions and regional rural banks have been told to take a re-look and rectify errors, if any,’’ a senior Nabard official said.

According to CAG, out of 90,576 cases it test-checked, lapses were found in 22.32 per cent cases.

The irregularities included disbursal of benefits to in-eligible farmers, claiming of additional charges from the government and waiver of loans in violation of rules, CAG said.

The lending institutions (banks) ‘had not obtained’ acknowledgement from the farmer, which was mandatory, the report said.

MFIs

The issues relating to the reimbursement claims of micro finance institutions may be ‘examined’ to ensure that the benefit of the scheme had actually reached the farmer and was not ‘restricted’ to MFIs only, CAG said.

A private scheduled commercial bank had received reimbursement of Rs 164 crore loans extended to micro finance institutions in violation of guidelines.

naga.gunturi@thehindu.co.in

(This article was published on March 15, 2013)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.