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J&K Bank’s profit declined by 500% in five years: CAG

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Srinagar:  From increase in Non-performing Assets (NPAs) to drop in profits, Comptroller and Auditor General (CAG) has exposed the dark underbelly of Jammu and Kashmir Bank in its newly released report.

The report has revealed that the bank had not complied with the Securities and Exchange Board of India (SEBI) regulations.

It has disclosed that the profit earned by the bank from 2013-2018 declined by more than 500 percent.

“The profit earned by the bank declined from Rs 1,182.47 crore in 2013-14 to 202.72 crore in 2017-18,” the report said.

The CAG audit report held the increasing NPA of the bank responsible for low profit in five years.

The report said the bank’s credit control system and financial reporting system even failed to identify the increasing NPAs on time.

“This is mainly due to an increase in the Gross Non-Performing Assets (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 percentage of NPAs to gross advances also increased from 1.62 percent at the end of March 2013 to 9.96 percent at the end of March 2018. The Bank also suffered a loss of Rs 1,632.29 crore during 2016-17,” the report said

The report highlighted the bank inefficiency to recover outstanding during these five years.

“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, regular monitoring, etc. 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 report highlighted.

The audit report noticed deficiencies in Information Technology systems of the Bank “due to which it could not ensure technology based solutions for some of its operations.”

It highlighted the irregularities in the recruitment of Relationship Executives and Banking Associates during the period.

“The Bank prepared district-wise merit list of 3,107 candidates. The fact that the recruitment would be district-wise was not mentioned in the advertisement notification. Bank’s recruitment policy did not specify preparation of merit list on a district-wise basis and the decision was taken by the Chairman without the approval of the BODs,” the CAG audit said.

The audit report claimed that the bank’s concentration risk for industry-wise exposure was on the higher side when compared to the average of the overall banking industry.  

“The annual growth of deposits of the bank during the last four years ending March 2017 was far below overall National average of Scheduled commercial banks,” it said.