NEW
DELHI: The government will take action against auditors of public
sector banks found responsible for the anomaly in the Centre's farm loan
waiver scheme, according to a senior official. Erring auditors will be
barred from taking up any more assignments with state-run banks, the
finance ministry official said. "They will be black listed and will not
be allowed to audit any public sector firm for at least three years."
The
Comptroller and Auditor General (CAG), the country's chief auditor, had
on Tuesday said 8.5% of the 80,299 farmer accounts audited were found
to be ineligible for the Agricultural Debt Waiver and Debt Relief
Scheme. The scheme, floated in 2008, wiped off debt aggregating Rs
52,260 crore for the 37.3 million farmers it covered. In its report, the
CAG had suggested that bank executives, internal auditors and central
statutory auditors who certified the information for passing the claims
should be made accountable for the lapses.
"Action
will be taken against banks under the Banking Regulations and first
information report will be filed in case of tampering of records," the
official said. Banks have also been directed by the finance ministry to
scrutinise beneficiaries under the farm loan waiver scheme and take
legal action against erring executives. According to the CAG, lapses and
errors were detected in 20,000 of the 90,000 accounts that were
audited.
In
nearly 2,800 cases, about Rs8 crore went missing because of tampering
by bank executives. The report further said that over Rs 20 crore was
doled out to ineligible farmers or for loans taken for purposes other
than agriculture.
In
this regard, the finance ministry has directed banks to strengthen
their system of compliance on the observations of statutory auditors.
"It was found that statutory auditors do not furnish a draft report and
their observations, as and when received, are addressed," the official
said. Banks have also been asked to provide the objections raised in the
RBI's preliminary audit report for the last three years.
Bank
auditors, however, say they are being unjustly targeted, as they do not
have control over the real-time data being provided to them. "The
problem specially lies at remote places, where the monitoring is loose,
the bank staff is not keen, and sometimes gives leverage," said Madan
Verma, senior partner with M Verma & Associates, the firm has been a
central statutory auditor for a list of state-run banks, including the
State Bank of India, the country's largest. Some bankers say that there
could have been only some cases where ineligible beneficiaries were
knowingly provided relief.
"There
could be a list of cases where clarifications would have been sought
and genuine errors occurred during the process," said a senior manager
with a state-run bank. To tighten regulation, the finance ministry wants
banks to move towards software-based audit systems. It also wants the
frequency of Audits under Risk based system to be fixed at 9-12 months
for extremely high-risk branches, 12-15 months for medium-risk branches,
and 15-18 months for the rest.
P
Chidambaram has already said that action will be taken against banks
found involved in irregularities besides the ineligible recipients of
the scheme.
Sources:
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