STATE TIMES NEWSNew Delhi: Flagging corporate governance lapses at J&K Bank, a CAG report said that the lender’s profit declined from Rs 1,182.47 crore in FY2013 to Rs 202.72 crore in FY2018 due to increase in gross non-performing assets (NPAs).The report tabled in Parliament on Wednesday stated that the bank had not complied with the SEBI Regulations and some of the provisions of Companies Act, 2013, relating to corporate governance.
Jammu: Total revenue receipts of Jammu and Kashmir government for 2016-17 were Rs 41,980.72 crore as compared to Rs 35,780.60 crore in the previous year, marking an increase of Rs 6,200.12 crore, the Comptroller and Auditor General (CAG) of India said on Wednesday.Out of this, 28 per cent of the total receipts were raised through tax revenue (Rs 7,819.13 crore) and non-tax revenue ( Rs 4,074.44 crore), and the balance 72 per cent were received from the Government of India as State’s share of divisible Union taxes and duties (Rs 9,488.60 crore) and Grants-in-aid (Rs 20,598.55 crore), the CAG said in its report presented in Parliament.The report on Revenue Sector and Public Sector Undertakings (Social, General and Economic Sectors) on Government of Jammu and Kashmir for the year ended 31 March 2017 revealed that the test check of the records of 61 units out of total 261 auditable units of Sales Tax/Value Added Tax, State Excise, Motor Vehicles and Law Departments conducted during the year 2016-17 showed under assessment/ short levy/ loss of revenue aggregating Rs 316.16 crore in 763 cases.During the year, the departments concerned accepted under assessment and other deficiencies of Rs 5.88 crore involved in 104 cases which were pointed out in audit during 2016-17 and earlier years.The Departments collected Rs 57.74 lakh in 25 cases pertaining to audit findings of previous years as well as of the year 2016-17, the report said.On the performance Audit Levy, Assessment and Collection of Tax on Services, the report said since the service tax levied by the Union Government on taxable services does not extend to erstwhile Jammu Kashmir State, the then government had brought taxation of services under the ambit of Jammu and Kashmir General Sales Tax (GST) Act, 1962 with effect from March 1997.“Non-fixation of targets for collection of tax from the services as goods under J&K GST Act, 1962 and failure to widen the tax base by way of increasing the revenues from notified services other than works contracts revealed that tax planning was not adequate,” the report said.It said the tax rate was enhanced from 10.50 per cent to 12.60 per cent from 1 April 2015.The report said the 23 Drawing and Disbursing Officers (DDOs) deducted tax on payment made during the period 1 April 2015 to 31 March 2016 at the lower rate of 10.50 per cent which resulted in short deduction of tax of Rs 0.50 crore.Tax at concessional rate of 4.2 per cent was to be deducted for centrally sponsored projects sanctioned/ allotted up to 31 March 2007. The applicable rate of tax is 10.5 per cent. Three DDOs had deducted tax at the lower rate of 4.2 per cent for contracts allotted after 31 March 2007 which resulted in a short deduction of tax of Rs 72.87 lakh, it said.It said the TDS deducted shall be deposited in the treasury within 15 days but 12 DDOs deposited tax after a delay of 3 to 160 days for which they were liable to pay penalty of Rs 4.64 crore.“The Act provides for a penalty of Rs 5,000 per contract if a copy of works contract is not submitted to the Assessing Authority. Copies of 4,292 works contracts executed during the period 2013-14 to 2015-16 were not received from 23 DDOs and the Assessing Authority had not imposed penalty of Rs 2.15 crore, the report said.It said the concealment of purchases by 31 dealers resulted in non-levy of tax, interest and penalty of Rs 9.79 crore, while details with regard to deposit of Tax Deducted at Source (TDS) into Government account of 26 dealers were not recorded on the TDS certificates which meant that these TDS certificates were not amenable to verification and risk of non-deposit cannot be ruled out.The Assessing Authorities had not imposed a penalty of Rs 46.44 lakh on 71 dealers for late filing of returns (266 returns) payable at the rate of two percent per month of the tax payable or Rs 1,000 per month, whichever is higher.The Assessing Authority did not levy interest of Rs 33.36 lakh on delayed payment of tax by a dealer, the report said.It said due to lack of monitoring of returns and recovery of the tax from a dealer, the Government had been put to a minimum revenue loss of Rs 1.21 crore.The Assessing Authority did not ensure payment of tax by the main contractor which resulted in non-levy of tax demand of Rs 55.32 lakh, it said.It said the details regarding the total number of persons responsible for deduction of tax that were required to apply for Tax Deduction Number (TDN) were not available with the Department.Database/ records of quarterly returns of the TDN holders had not been maintained by the Department, the report added.
“Profit earned by the (J&K) Bank declined from Rs 1,182.47 crore during 2013-14 to Rs 202.72 crore in 2017-18, mainly due to increase in the Gross NPAs of the Bank from Rs 643.77 crore, as on 31 March 2013 to Rs 6,006.70 crore, as on 31 March 2018, the report said.“Percentage of NPAs to Gross Advances also increased from 1.62 per cent at the end of March 2013 to 9.96 per cent at the end of March 2018. The Bank also suffered a loss of Rs 1,632.29 crore during 2016-17,” the report said.It said the bank’s credit control system and financial reporting system failed to identify NPAs in time. Although there had been 24.58 per cent growth in deposits during 2013-14 to 2017-18, annual growth of deposits of Bank during last four years ending March 2017 was far below overall National average of Scheduled Commercial Banks, it said adding the Bank had recorded an increase of 51.30 per cent in advances during 2013-14 to 2017-18, annual growth fluctuated between (minus) 1.78 per cent and 18.28 per cent.The report said percentage of unsecured advances to total net advances had increased from 20.16 per cent at the end of March 2014 to 27.90 per cent at the end of March 2018.The bank’s concentration risk for industry-wise exposure was on the higher side when compared to the average of overall banking industry.Sanction/ release of credit facilities, without safeguarding the Bank’s interest through adequate security cover, proper credit appraisal, adherence to the pre or post-disbursement conditions of the sanctions and regular monitoring not only led to NPAs but also loss/non-recovery of Rs 197.98 crore, doubtful recovery of Rs 1,599.14 crore and excess payment of Rs 14.10 crore in test-checked cases, the CAG said.It said the deficiencies were noticed in IT systems of the bank due to which it could not ensure technology-based solutions for some of its operations.“Sanctioning of one-time settlement in deviation of bank’s recovery policy resulted in sacrificing a principal amount of Rs 17.97 crore in test-checked cases. The bank sold 10 NPAs to Asset Reconstruction Companies (ARCs) during the period 2014-2018 by sacrificing principal amount of Rs 671.10 crore and unapplied interest of Rs 504 crore. Sale of financial assets to ARC below the reserve price resulted in loss of Rs 21.89 crore,” the report said.It said the imprudent decision-making, non-invoking of guarantee and non-safeguarding of bank’s interest led to doubtful recovery or loss of Rs 180.43 crore in test-checked non-performing investments.“Irregularities in recruitment of Relationship Executives and Banking Associates were noticed. The bank had spent 53.09 percent to 83.82 percent of Corporate Social Responsibility (CSR) budget during 2016-17 and 2017-18 on a single activity/project and had also incurred 49.33 per cent to 95.27 per cent under a single segment during 2015-16 to 2017-18, which was in violation of CSR policy, it said.Further, the CAG said in contravention to Bank’s CSR policy and Companies Act 2013, an irregular expenditure of Rs 46.96 crore was incurred out of CSR fund.
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