Presentation on theme: "Audit of Cooperative Banks"— Presentation transcript:
1 Audit of Cooperative Banks Presentation by:K.V.Lakum,DirectorNational Institute of Cooperative Management, Gandhinagar, Gujarat
2 Scope and Principles of Cooperative Audit Cooperatives are user-owned enterprises (unlike joint stock companies which are investor owned) working on commercial principles to ensure proper flow of economic resources to its members and for their general well being. UCBs are the lower tier of the cooperative structure with direct access to its members and connecting them to the higher tiers of the structure.
3 Being democratic institutions, cooperative societies need to empower its members with powerful tools to ensure that the management of these institutions is truly democratic and professional.Audit and Audit Report are example of such tools.Failure to get the books of account audited and to publish the annual report in time is an indication of poor health and ineffective management of the cooperative.
4 Historically, the responsibility for audit of these institutions is cast on the Registrar of Cooperative Societies (RCS) who is also the regulator and the administrator of Coop. Banks.However in some states, the role has been bifurcated with Audit of Coop. Banks (along with other cooperatives) having been shifted to a separate Directorate without disturbing the basic hierarchical reporting structure.This bifurcation to some extent has ensured professional independence of auditors in those states where the Directorate of Audit is independent of the RCS.
5 Audit in Banks.Audit is a systematic examination of books of accounts with relevant supporting documents such as vouchers, bills, receipts and other documents to ascertain and/or to verify the financial operations.To report whether the balance sheet of Coop. Banks has been properly drawn up so as to give a true and fair view of the state of affairs of the Bank and whether the profit and loss account for the period under audit gives fair view of the profit or loss of the Bank.
6 Audit in Cooperative Banks. Audit in Coop. Banks is a more comprehensive inquiry into the general affairs and management of the Bank, its governance in accordance with applicable statutory obligations and its byelaws and rules.To verify its financial record keeping, propriety of transactions and adherence to basic internal controls and procedures.It is therefore a financial and an administrative audit.
7 According to the Maclagan Committee cooperative audit extends beyond the bare requirements of the Societies Act and should embrace an enquiry into all the circumstances which determine the general position of the Bank.It would, for instance be the duty of the auditor to notice any instances in which the Act, rules or byelaws have been infringed upon, to verify the cash balance and certify the correctness of the accounts to ascertain that loans are made fairly for proper periods and objectives and on adequate security, to examine repayments in order to check book adjustments and improper extension.Further generally see that the Bank is working on sound lines and that the committee, the officers and the ordinary members understand their duties and responsibilities
8 Special features of Coop. Banks audit The auditors of Coop. Banks, besides being well versed with core techniques of audit, are expected to have a fairly reasonable knowledge of subject of the cooperation and the accounting system and controls followed in Coop. Banks.Particularly in those Coop. Banks which owing to their small size would not be able to implement a regime of internal control systems and procedures due to which several of them may be vulnerable for several business risks and frauds.
9 Some of the special features relevant to the audit of Coop. Banks are: the auditor of Coop. Banks should be familiar with the relevant provisions of the Cooperative Societies Act, 1912 (the Central Act) as well as the respective State Acts which are modelled on the basis of the Central Act;every Coop. Banks should have framed its byelaws and registered the same with the RCS; further no amendment to the byelaws will be valid until the same has been registered by the registrar;in respect of any debt due from a member, Coop. Banks shall have a charge on his/her share or interest in the capital of the Coop. Banks, his/her share of deposits and on dividends, bonus or profits due to him from the Coop. Banks;
10 Coop. Banks are required to create statutory reserves as prescribed by the Societies Act including transferring a prescribed percentage of profits to a reserve fund;under the provisions of the Acts, as amended in terms of recommendations of Vaidhyanathan Committee, MoUs are executed between the Central, State Government and NABARD.The Registrar upon suitable recommendation by the Management of Coop. Banks can get the audit conducted by the departmental auditors or by persons/firms having stipulated qualifications.
11 The audit of Coop. Banks shall include the following: • examination of overdue debts, if any; • verification of cash balance; • verification of securities; • valuation of assets and liabilities; • prudent management of the affairs of the Coop. Banks; • examination of audit schedules and returns furnished to auditor along with books of accounts; • issue of an audit certificate.
12 The statements that need to be furnished to the auditors along with books of accounts are: • membership and share capital of Coop. Banks; cash balances; investments and other securities; • schedule of individual ledger balances with opening and closing balances duly reconciled; • details of loans and advances along with demand, collection and balances statements;
13 cont..• statement of interest accrued and overdue on loans and advances;• statement of interest accrued and overdue on borrowings and deposits;• statement of investments with confirmations furnished by entities with whom those investments are made;• estimated bad and doubtful debts including the provisions for non performing loans and advances as well as investments
14 C.R.A.R. (CAPITAL RISK ASSETS RATIO) Urban Co-Operative BankAudit Report FormatC.R.A.R. (CAPITAL RISK ASSETS RATIO)a) Whether the bank has correctly calculated the CRAR as per the guidelines of the R.B.I. from time to time.Whether the bank has obtained the minimum standards as prescribed by the R.B.I.Auditor has to verify the above particulars and to give his opinion.
15 NET WORTH: (Statement-1) Calculate the increase or decrease in the net worth with reference to Paid Up Share Capital and Free Reserves and compare the same with last year - in statement attached herewith.N.P.A. (Non Performing Assets)Verify the N.P.A. Classification done by the bankwhether the same have been classified as per the guidelines of R.B.I. ?Submit your report on the discrepancies found on such verification. (Statement-1)
16 INFORMATION ON INCREASE/DECREASE IN N.P.A. N.P.A. amount at the beginning of the yearClassified as N.P.A. during the yearRecovery during the year in old N.P.A. A/cs.N.P.A. Upgraded during the year which were in N.P.A. category last yearN.P.A. written off during the yearN.P.A. regularised during the year on account of Re-Schedulement SchemeN.P.A. at the end of the year
17 In the cases of settlement with the debtor, whether bank was having security of properties?Note down the cases where R.B.I. guidelines forsettlement of dues have not been followed.Whether bank has shown Interest not realised in NPA by way of contra entries in Balance Sheet.Whether proper adjustment entry (Havala) have been passed for unrealised interest by debit to Interest Receivable A/c. and credit to overdue Interest Reserved A/c. Verify the Havala entry.
18 Whether repayment schedule is being prepared for regular recovery of over due term advances ? Whether duties have been cast on any officer of the bank to supervise regular recovery ?Whether periodical report is being submitted to the Board of Directors for un-recovered accounts?Whether adequate provision in P&L A/c. has been made for Bad and Doubtful advances ?If provision is inadequate - give your comments with amount.
19 Whether Bank has constituted a Committee to take actions for overdues? OVERDUE RECOVERY ACTIONSWhether Bank has constituted a Committee to take actions for overdues?Whether a meeting is arranged with such Debtors periodically ?If yes, No. of meetings held during the year ?No. of such Debtors and Amount Nos. AmountWhether Bank has regularly submitted a Statement u/s. 115(f) for recovery of overdues ?Verify its correctness and instances of violation if any.
20 Recovery Information U/S. 159 (Submit in Statement format) Submit the information in Statement-3regarding actions taken for recovery of overdue, showing the amount and No. of cases.Recovery Information U/S. 159(Submit in Statement format) Recovery Information under the Securitisation ActONE TIME SETTLEMENT (OTS) AND DEPOSIT SET-OFF SCHEME AS PER R.B.I. GUIDELINES
21 INVESTMENTS Whether Valuation of Investments has been done as per R.B.I. Guidelines at the end of the year. If no report the discrepancy in valuation.Investments Policy - made or not?Obtain the details of S.L.R. and Non SLR investments made during the year, If investments are made in Non "SLR" - Verify versions for the same. Income of violation of R.B.I. Guidelines report on the same.Whether S.L.R. and C.R.R. have been maintained adequately during the year ? Report cases of violation.Who take decisions for investmentAuthority for making decisions for investments.
22 Whether bank is holding any Un-approved investment as per R. B. I Whether bank is holding any Un-approved investment as per R.B.I. Guidelines - if so give details of such Investments.Verify the cases - where Pre-Sanction of Registrar is necessary u/s. 71 of Co-Operative Societies Act, whether the same have been obtained or not.Give details of Order No. & Date where approval is granted.Comments on Un-approved investments.
23 Whether the provisions of Section 115(f)(g) of Co-Operative Act and Section 18 & 24 of Banking Regulations Act and Section 71 of Co-Operative Act, have been duly observed by the bank.Submit a special report to the Registrar in respect of any violation.Whether the Investment made by the Bank are giving regular return or not - if not, comment on the same. (i.e. productive or non productive)Whether investments are made out of Surplus Funds or from Current Fund.Whether provision for probable diminution/depreciation in Investments have been made in the Risk Fund?Whether adequate provision have been made for N.P.A. Investments? verify the same.
24 INVESTMENTS IN GOVERNMENT SECURITIES Whether classification of Government Securities have been done according to R.B.I. Guidelines or not ? Valuation of Securities have been reviewed every month as per guidelines or not?Profit or Loss arise on sale of securities have been property booked or not?Whether adequate provision have been made for Investment Depreciation Reserve and for Investment Fluctuation Reserve or not?Whether Bank has observed R.B.I. Guidelines for Purchase & Sale of Government Securities ?Cases of violation may be reported.Whether SGL / CSGL A/cs. opened ? In which Bank?Cont….
25 Cont……….Whether the Statement of these A/cs. are tallied with the bank's transaction on day to day basis ?Any discrepancy in transaction or balance should be reported.Whether investments are in custody of the bank ? Verify the same and report on discrepancy - if any.If Securities were purchased thro' Single Broker over 5% of the total turn over of securities, report on the same.Whether Brokerage is paid to the broker - if so broker wise amount thereof. Interest regularly received on securities or not, as per terms of securityWhether same have been properly valued at the end of the year as per R.B.I. guidelines.Verify the transactions of purchase & sale during the year - and submit the informationit statement (Statement No.7)
26 ADMINISTRATIONWhether election of directors has been held as per by-laws of the Bank ?Give list of Directors and date of 1st meeting.Whether any member of the Board possess any disqualification u/s. 115C or Rule 32 of the Co-Operative Act ?Whether Powers & Duties of the Board have been fixed as per Rule 33 & 34 ?Whether by-laws includes Provision for appointment & duties of Committee –Sub-Committee ?
27 Whether Board Proceedings include information about Agendas, co rum, Presents Signature etc. and same have been regularly written and signed ? Go thro' the same and give your comments.Whether the duties of Officers, Sub-Officers and employees of the Bank have been specified in by-laws of the Bank ?Whether the same are clearly distinguished by Board's Resolution.Whether responsibilities of Officers / Employees have been fixed ?Wherever sureties are required - same have been obtained ?
28 Whether works have been carried out as per administrative instructions and delegation of powers ? Whether supervision is regular ? Comments on discrepancy.Whether Internal Control System is there?Whether Service Regulation for appointment and services of employees have been made ?Discussion with employees about legal questions, advices and review of work is done periodically by the Board.
29 IMPORTANT POINTS ABOUT CHAPTER 10(B) of GSC ACTAt the time of appointment as Director, whether details about family members and associated Firms / Companies are obtained and it is on record of the Bank?Whether list has been prepared of Company & Firm in which Board members are interested with Name, Address of Directors etc.Obtain a copy of such list.On the date of Nomination, whether deposit of Rs.20,000/- obtained ? Detail Statement of deposit account, Type of deposit, balance amount and maturity date, to be obtained.Cont…..
30 Cont…..Whether Board members have taken loan from any other Co-Operative Banks, Co-Operative Societies etc. ? Out of above whether any account is overdue - if so obtained details thereof.Particulars of Statement 1 to 7 to be sent to Registrar periodically.No. of cases liable to be suit filed cases during audit period.Actual No. of cases - suit filed.
31 RESERVES & APPROPRIATION OUT OF PROFIT Whether Reserves & Funds shown in Balance Sheet created out of bank's profit ? If otherwise, then give details.Whether profit is appropriated to various funds as per by-laws of the Bank ?Verify appropriation of profit during audit period.Whether dividend is declared, as per provisions of Co-Operative Societies Act ?Whether calculation of dividend is correct ?Whether dividend is paid properly ? What action is taken for Unclaimed dividend beyond 3 years ?
32 Whether Provision of Education Cess is as per Co-Operative Societies Act, in proportion to dividend ? Whether this Education Cess is sent to District Co-Operative Union or State Co-Operative Union ?Whether as per provisions of Co-Operative Societies Act, bank has provided 15% of profit to Bad & doubtful Reserve ?Whether during the year any amount is debited to any of the Reserve Funds ? If so, then verify nature of debits and its reasonability.
33 BORROWINGSWhether the Bank has observed the provisions of Section 14(a) of Banking Regulations Act? Amount placed in Fixed Deposit with District Bank for S.L.R. purpose, and if any facility / borrowing is obtained against such deposit,Whether the same have been deducted while calculating the S.L.R. or not? Eligible liquid assets for S.L.R. have been properly calculated or not? Confirm the same.Whether bank has obtained any borrowings ? If yes any then verify its necessity.Whether borrowing is utilised within its sanctioned limit?
34 Whether proper planning is made to repay the debt in time. from whom ? Give in detail(i)Name of Institution, (ii) Amount of outstanding, (iii) Sanction date, (iv) Security offered, (v) period of debt, (vi) Sanction Limit.From whom debt is taken : Scrutinise borrowings taken by bank, whether it is in accordance with provision of by-laws ?Whether amount is used as per requirement ?
35 INCOMEVerify Vouchers for Interest, Commission, Brokerage, Locker Rent & Other income with Day Book and Supplimentary. Report on discrepancy if any.Accrued interest income is correctly worked out or not ? Whether provision is made for the same ? Whether J.V. is passed of interest income due but not received before profit is worked out at the end of year ?Give your comment on correctness of income credited in P&L A/c.
36 EXPENSESVerify the genuineness of Interest paid, Commission, Brokerage, Rent, Taxes, Electricity, Telephone Expenses, Directors‘ Sitting Fees, Travelling Expenses Legal Expenses and Other Expenses. Whether the same are as per norms ? If there is any objectionable or excessive expenses, give your comments for the same. Whether T.D.S.has been made in applicable cases or not?Verify and report - if necessary.
37 CASH & BANK RECONCILIATION CASH RECONCILIATION WITH OTHER BANK BALANCE WITH BRANCHES OF THE BANKTYPE OF DEPOSIT / DETAILS OF RATE OF INTEREST FIXEDWhether Trust Deposits are accepted ?Whether sanction is obtained of competent authority and deposit taken during that period ? Give details.Compare interest rate of loan against deposit ? Whether efforts are made to reduce high rate deposit ?
38 DICGC PREMIUMWhether Premium is paid regularly to DICGC and is calculated correctly? Whether renewed in time ? Tally Statement. Whether Annual return under Sec. 115(chh)(kh) is sent regularly ?Obtain details of premium paid during audit period, amount of premium & total deposit on which premium is paid. Duration of deposit insurance and details of deposits be tallied with Balance Sheet or with ledger accounts of the Bank.
39 ADVANCESWhether advances are within the overall exposure norms prescribed by the R.B.I. ?Whether Rules for sanctioning various of Loans have been approved ? Since when it is in force ?Whether rules / procedures are updated with change and amendment ?Whether overall limit is prescribed for individual / group advances ? How much ? If their limits are exceeded, whether informed to board ? Comment on violation if any. with reference to norms fixed by R.B.I..Whether Priority Sector Advance & Weaker Sector Advance are within limit of 40% & 25% respectively ? Whether these advances are classified as per norms ? Obtain detail statement.Cont………
40 Cont……..All details in application for advances have been duly filled-up?Adequate documents have been attached with the application according to nature of advances or not?Whether appraisal report of Loan Officer/Manager is attached with the application and M.D. has given his opinion or not?Whether a certificate from the Manager regarding adequacy of documents is obtained or not?Reference of Resolution, sanctioning the advances is given on the application or not? Prior scrutiny of proposal for advances is being done or not?After disbursement, whether supervision is made for utilisation of advances for the purposes for which advance is sanctioned, Submit your report on the cases - where above procedure is non followed.Cont…..
41 Cont…..The overall limit of advances of the bank have been calculated as per R.B.I. Norms – while sanctioning advances for working capital.Whether withdrawals beyond sanctioned limit are there ? If yes, whether reported to competent officer ? Whether Board is informed of the same ?Whether sanctioned is obtained for the same? If sanctioned limit is increased frequently verify the reasons & securities. Whether working capital is renewed regularly - if there is increase in limit then verify its genuineness & security.Whether account is regular or not and interest is paid regularly.Prepare a list where O.D. is sanctioned by officer and get clarification for allowing OD?If there is violation of R.B.I. Guidelines, determine the responsibility and submit your report.Prepare Quarterly Statement of O.D. outstanding.Cont….
42 Cont….Whether Cheque purchase facility is being granted by the Bank?Whether withdrawals have been granted against un-cleared Cheque/ Instrument?If yes, report on the same.Is there any accounts in which no regular transaction since long time, except withdrawal and deposit of substantial amount ? Whether separate Register is kept for these account ? Is there any instances of debit balance in Current Accounts ?If debit balance then whether informed to C.E.O. or authorised officer ?Whether provision of Share linkage with loan (% of Share to be taken) is observed ? Give instances of breaches.
43 Cont……Whether resolution for Interest Rate, Margin, Moratorium period etc. of Loan passed ? Whether updated as and when required ? Whether Credit facilities released by the branch without execution of all necessary documents and without verification?If such cases - report on the same.Creditworthiness Register is maintained ?Whether Loan Application is properly appraised by G.M. / Manager ? Sanctioned limit / Renewal Register is maintained or not ? Whether a Register for Overdue Borrower and Register for Creditworthiness of Guarantors are maintained ?Take overall review of the same.Cont….
44 Cont…Whether Loan Documents are properly executed on adequate Stamp Paper ?Whether it is duly filled up ?Borrower signature is obtained ?Whether adequate securities are there against advances ?If property is taken as security, Verify its title clearance certificte.Verify Equitable mortgage document with Register. If loan disbursed without adequate documentation - Give report.
45 LOANS GIVEN DURING AUDIT PERIOD DocumentationAs per Registrar Office, Directive No. SKK/01/K.Liquidation/ 1643/03 dated 15/10/03 Under Section 160(1),whether all documents are executed as per provision?Auditor has to report on the same. Whether Resolution is passed for Completion of documents before 2nd meeting. Whether Manager has given a Certificate for completion of all borrowers documents as at the end of the year 31/03/20___.Report on incomplete documents.(Certificate from Manager to be attached with report)
46 LOANS TO DIRECTORS - THEIR RELATIVES AND TO THEIR ASSOCIATE CONCERNS: In cases, where advances were given to Ex- Directors or to their relatives or to concerns in which they are interested,Whether recoveries are made regularly- If not report on actions taken against such borrowers.Whether advances given to Directors and their relatives during Audit period are properly reported to R.B.I. & Registrar of Co-Operatives. If R.B.I. guidelines are not followed for the same, submit a detailed report.If advances exceeded the prescribed limit - give details.Whether R.B.I. Statement sent regularly ? Whether Statement details tallied with record.
47 BILLS PURCHASED / CHEQUES DISCOUNTED: BANK GUARANTEE / LETTER OF CREDIT (ISSUED):SHARE CAPITAL / MEMBERS :Whether members register is prepared /updated as per bye-laws.Whether allotment of share certificate is pending? If yes, since how long?Give details of new members entered and members deleted during the year.Whether share transfer register is maintained ? Whether provision of Rule 17 have been violated ?Permission obtained for Authorised Share Capital and Amount of Paid-Up Capital ?
48 AUDIT INSPECTION:Whether audit committee is formed ?No. of Members, Name of Chairman, No. of meetings during the year.Whether Statement is submitted as per Sec.115 (f)(c) ?Verify the correctness of the details.Whether queries of audit /inspection report of R.B.I. complied within stipulated time ?Give Date of Report & its compliance submitted.In case of fraud or misappropriation, whether Board and Registrar have been informed ? Verify the details.Whether Statement is submitted as per Section 195 (f) (c) in time.
49 CONTRIBUTION FOR PUBLIC & CHARITABLE PURPOSES: Whether sanction obtained U/s. 70, for utilisation of 'Dharmada" Fund ?Give instances of permission not obtained.Appropriation of Dharmada Fund is done as per Rules ? If not give details.Obtain detail about utilisation of Dharmada Fund.Name of party/trust, Amount, Sanction details.Whether permission has been obtained for utilising the fund for Public purpose as per Government Resolution.
51 Credit Limit to Dairy Farm Rs. 25 Lacs. Auditors’ remarks : As the dairy products are highly perishable in nature it is advised to not to classify hypothecation on such stockCredit Limit :Rs – Dates are not mentioned in any security document
52 In 52 accounts with credit limit of Rs In 52 accounts with credit limit of Rs (two crores thirty six lacs ) stock statements not received for last 3 month. It should be treated NPA this may lead to additional provision.Bank had additional provision but it is advisable to insist for classification of such accounts as NPA; this will increase % of gross NPA; in this case total advances : Rs.90 croresNPA Rs Crores% of NPA 7%If NPAs of Rs.2.36 crores are added the % of NPAs will increase to 9%
53 One bank had not shown 22 accounts as NPAs auditors remarked that the number of NPA account was reported wrongly.The balance outstanding in respective accounts was NIL and only interest was to be recovered; the amount of interest was shown as CONTRA items. As and when interest was recovered entries were made to reduce contra items and credit the amount to interest account.On receipt of recovery in NPA the bank used to credit the same to principal amount first.The auditor has objected to this.
54 This is a case of appropriation of amount on recovery This is a case of appropriation of amount on recovery. The law of appropriation incorporated in the Indian Contract Act. (section 59 to 61) allows bank to take amount of recovery first to principal or interest (rule in Claytons case) But such policy is required to be adopted by a board resolution and declared in notes on accounts/change in accounting policy.
55 Loan against vehicle:Auditor : loan has been sanctioned as hypothecation (i.e. pledgement against stock). However in this case stock cannot be provided. Bank should identify this account as SHAKHATRAAs on asset classification of one account was under loss category and 100% provision is made. The account was upgraded to D-3 category as on This is an error.
56 Credit Limits RsRs-Auditor’s remarks : Equity mortgage should be verifiedOccasional membership form is incomplete.As per guideline RBI limit for gold loan is prescribed to a maximum of Rs one lac. In this account the gold loan limit sanctioned is Rs. 1.5 lacs. Which is irregular.
57 ઓડીટર: ના કાયદા નિષ્ણાંત તરફથી આવો કોઇ દાખલો મેળવવામા આવતો નથી. તારણમાં લેવાયેલ મિલ્કત પર કરજ લેનારના માલિકી હક્ક વિષે તેમજ તેની કિંમત વિષે કાયદા નિષ્ણાંત તરફથી દાખલો મેળવવામાં આવે છે?ઓડીટર: ના કાયદા નિષ્ણાંત તરફથી આવો કોઇ દાખલો મેળવવામા આવતો નથી.(In fact title clearance report is obtained by bank in all cases of mortgage of immovable property)
58 લોન અને ડિપોઝીટ ખાતામાં વ્યાજની ગણતરી કોમ્પ્યુટર ધ્વારા થાય છે તેમ છતાં મોટા ખાતાઓમાં વ્યાજની ગણતરી વ્યાજના દરનો ફેરફાર, ઓફિસર ધ્વારા દર મહિને ચેક થાય તેવી પ્રથા અપનાવવા સુચન છેTest Check?System audit?Auditor/officer?
59 Inventory value of audited balance sheet as on 31-03-11 is Rs Inventory value of audited balance sheet as on is Rs and as per stock statement provided to bank and DP short as on Rs stock and DP short(many such cases)The bank has not considered concept of paid stocks as per RBI norms in case of cash credit accounts
60 એનેક્ષર-એચ : રોકાણો – રોકાણો સંસ્થા માટે ઉત્પાદકીય છે એનેક્ષર-એચ : રોકાણો – રોકાણો સંસ્થા માટે ઉત્પાદકીય છે. કે બિનઉત્પાદકીય છે?ઓડીટર : ગુજરાત સ્મોલ ઇન્ડસ્ટ્રીઝ કોર્પોરેશનમાં કરવામાં આવેલ રૂ. 30 લાખનું રોકાણ બીન ઉત્પાદકીય છે – ઉક્ત રોકાણ ઉપર વ્યાજ મળતું નથી.એનેક્ષર-કે : રોકાણો – એન.પી.એ. બનેલા હોય તો તે અંગે પુરતું પ્રોવીઝન કરવામાં આવેલ છે કે કેમ? તેની વિગતો મેળવો.ઓડીટર : રોકાણો નોન પરફોર્મીંગ બનેલા ન હોઇ પ્રશ્ન ઉપસ્થીત થતો નથી.(હકીકતમાં રૂ. 30 લાખની જોગવાઇ ઇન્વેસ્ટમેન્ટ ડેપ્રીસીએશન ફંડ થયેલ છે)
61 બાંધી મુદતની થાપણો જે પાકી ગઇ છે તેમાંથી કેટલીક થાપણો પર બાંધી મુદતનું વ્યાજ ચુકવવામાં આવે છે અને કેટલીક થાપણો ઉપર કોઇ પણ પ્રકારનું વ્યાજ ન ચુકવતાં માત્ર પાકતી રકમનું જ ચુકવણું કરવામાં આવે છે. આવી ક્ષતિઓ દુર કરી RBI ની માર્ગદર્શીકા મુજબ બચત ખાતા પર મળવાપાત્ર વ્યાજના દરે વ્યાજ ચુકવવા સુચના છેNo RBI GuidelinesNo overdue int if not renewedprovision to be made at SB rateBank has its own rules.
62 Called explanation in course of audit: one auditor has given a letter to the bank during course of audit, which inter alia states.“It is observed that overdue accounts are 109 where as NPA accounts are 81. All overdue accounts are NPA but bank has declared 81 NPA accounts out of 109. overdue accounts. Remaining 27 are NPA but are not declared NPAs. Kindly explain why such accounts are not declared as NPAs with your views and justification”
63 Bank’s reply : RBI guidelines for income recognition and asset classification (IRAC) Assets (i.e. outstanding of accounts) are declared as NPAs for the purpose of making provision which may ultimately effect the profit. In the 27 accounts there is no outstanding debit balance in any of them. Hence no provision is to be made even if they are declared NAPS. For these accounts norms relating to income recognition are to be applied Interest is overdue and not taken as income but is shown as contra items.
64 In an account limit was Rs. 1 In an account limit was Rs crores in this account ad-hoc additional limit of Rs. 95 lacs was allowed for one month in this case only demand promissory note for the additional amount was taken.Auditor : no additional document so as to create appropriate additional charge over the security already obtained was taken or registered by bank. In absence of this, ad-hoc limit may be termed unsecured advance and may be violation of exposure limit.
65 For Guarantee issued:Vi I collateral security obtained?Auditor: yes in most of the cases the collateral security taken is already lying with the bank as security for other facilities.In case of loan sanctioned against receivable, bank should obtain age wise receivables statement. Showing figure action of outstanding under and above 90 days.(Bank should not allow drawing against bills due by end of 90 days)
66 While sanctioning loan to any member the prudential and creditworthiness of guarantor/member not considered.In case of CC hypo account bank should consider only paid stock for considering D/power. Bank has completely overlooked the paid stock concept even though huge amount of creditor are shown in trial balance unpaid stock is taken into consideration while working out the D/power.The computer programme does not provide appropriate check on D/P in number of cases while allowing operation the DP is ignored and drawing is allowed is excess of DP.
67 કે. બી બેન્ક ધ્વારા આકારેલ પરંતુ વસુલ ન આવેલ વ્યાજ (Unrealized Interest) ને આવક તરીકે દર્શાવવામાં આવેલ છે? કે કેમ? તે ચકાસો. આ ઉપરાંત એનરીઅલાઇઝડ ઇન્ટરેસ્ટને રીસીવેબલ ખાતે ઉધારીને તેની સામે OIR ખાતે જમા કરવામાં આવેલા છે કે કેમ? તે હવાલાચકાસો.“અમોએ રીઝર્વ બેન્કના તાજેતરના સરક્યુલર મુજબની ગણતરી કરતાં એન.પી.એ. ની ટકાવારી ગ્રોસ 78.30% જ્યારે નેટ 0.00% છે.”કરવાપાત્ર જોગવાઇ રૂ લાખકરેલ જોગવાઇ રૂ લાખવધારાની જોગવાઇ લાખખોટ રૂ લાખ
68 Difference in CRAR Reasons : Bank had not deducted shortfall in provisions from TIER 1 Capital; compilation of RWA wrong as erosion / margins were not considered.ઓડીટરશ્રીએ જણાવેલ છે કે, “સી.આર.એ.આર. રીઝર્વ બેન્કની માર્ગદર્શીકા મુજબ સંતોષજનક છે.”Net worth assessed by : auditor Rs lacs Net worth Assessed by auditor in statement is Rs lacs but state in annexure ‘C’ as Rs lacsRBI RsBankIORWA705482Cap93.4243.87CRAR13.39.1
69 RBI InspectionThe difference between the bank's assessment of CRAR and the ins. officer assessment was attributable to wrong computation of risk-weighted assets by the bank and shortfall in provisionBankI.0.RWA36.6835.46Cap4.794.27
70 The variation between CRAR as calculated by the bank (23 The variation between CRAR as calculated by the bank (23.7 %) and as assessed by I.O. (2.4 %) was due to higher Tier-I capital calculated by the bank by not reducing shortfall in the provisions to the extent of Rs lacs. (Provision against NPAs, Standard assets, difference in GL)Bank had not amortised the premium every year by charging to Profit and Loss Account. The erosion was Rs.3.47 lakh on account of amortisation of premium upto March 31, The manager of the bank had taken Rs.1.38 lakh in cash from the bank for payment to advocate in but could not submit relevant bill till December 2011 Bank had not imparted any training to staff in last 10 years.
71 છેલ્લા ત્રણ વર્ષ દરમ્યાન સી.આર.એ.આર.ની ટકાવારી ચકાસી અહેવાલ કરો: %%%આ બેન્કની નેટવર્થ નેગેટીવ ( ) દર્શાવેલ છે.
72 Bank's total inter bank and single bank deposits (excluding deposits with GSCB / DCCBs) Rs exceeded the ceiling of 20 % and 5 % respectively of previous year's depositsThe board of Directors had not carried out a half – yearly review of securities transactions and the review note was not forwarded to the R.O, as required under CIR BDP (PCB) 37/ /2004 – 05 ofThe bank had a loan policy formulated and approved by the BOD in 2005 and not reviewed thereafter.
73 Bank had not framed investment policy The investment in Govt. Securities amounted to Rs which constituted 14.5% its NDTL. Bank had not complied with regulatory requirement of minimum 25% of NDTL in Govt. Securities as per RBI cir 12/16 ofઓડીટર : એનેક્ષરસી 4(1)(એ) સરકારી જામીનગીરીમાં રોકાણો કરતી વેળાએ આર.બી.આઇ. ની માર્ગદર્શક સુચનાનું પાલન થયેલ છે?ઉલ્લંઘનની નોંધ કરો.(ઓડીટર : હા)(based on this capital funds)Exposure LimitsRBI Rs.AuditorIndividual56.7859.02151.42157.41
74 no proof of business / financials ઓડીટ રીપોર્ટ : રોકાણો નોન પરફોર્મીંગ બનેલા હોય તો તે અંગે પુરતું પ્રોવીઝન કરવામાં આવેલ છે?રીમાર્ક : નોન પરફોર્મીગ રોકાણ નથી.Bank's IDR was 2.70 lakh as against the total requirement of Rs lakh.ઓડીટર : IDR અને IFR ની જોગવાઇ પૂરતી છે.The bank had classified its investment portfolio of Rs lakh under HTM category. At 25.4% of NDTL investment under HTM category were slightly beyond the prescribed limit of 25%Bank was neither taking into account the borrower's requirement / purpose of loans based on financials nor had it taken steps to secure advancesno proof of business / financialsstock statements obtained only at the time of sanction. Hence it is NPA after 3 months.
75 Bank's inter – bank deposits excluding deposits with SCB and DCCB were Rs lakh (24.7 %) which was not within the ceiling of 20 % of previous year end deposits.Bank's adherence to prudential norms was considered satisfactory, as it had introduced a system of classifying NPA on an ongoing basis.Functioning of audit committee was found unsatisfactory in view of non-compliance of concurrent and EDP Audit observations on irregurities in credit appraisal and post disbursement supervision.
76 Bank had reckoned profit of Rs. 26 Bank had reckoned profit of Rs lakh for the year as Tier-I capital, whereas only statutory reserve and building fund portion and admissible as per the extant guidelines on capital adequacy.Bank’s advances were concentrated in mortgage against land and building forming 55% of total advances Bank violated real estate exposure norms presented under RBI circular 23/12 dated bank gave importance to security. Assessment of credit need was not done, system of credit risk assessment was effective as the bank had not done ascertainment of purpose of loan and repayment capacity .
77 Bank had classified its investment portfolio Rs Bank had classified its investment portfolio Rs.262 lakh under HTM category. At 25.4 % of NDTL investments under HTM were slightly beyond the prescribed limit of 25 %. It was however noticed that the bank was taking the discount amount on purchase of G.sec to its income and showing securities at face value in its B/S instead of showing at purchase price. Such amt of Rs lacs is erosion and needs provision in IDR.A total Rs lakh was taken to P&L in such a manner. Hence this amount was taken erosion in computing net worth and CRAR. Bank is advised to follow correct accounting procedure.Bank was not getting any dividend on investment of Rs.0.20 lakh in shares of DCCB. Hence the same is treated as erosion. Bank is advised to make full provision as per Master cir of
78 Asset quality As per bank As per I.O Standard Assets 380.36 243.31 Substandard18.54106.27Doubtful10.8427.79Loss36.3168.68Gross NPA65.69202.74% of NPA14.745.5Net NPA %NIL33.8 %
79 Bank had not made any provision towards standard assets. Proceedings of board meetings were not recorded properly as blank spaces were left at several places which were fraught with risk.In terms of Para 25 of bye – laws the quorum in AGM had to be 20 % of total members or 100 which ever was less. However only 87 members attended AGM held for the years 2009 – 10; As such the proceedings were carried out in contravention of bye-laws.
80 Copy of statement 2 in transparency In one bank position of NPAs as on as stated by bank, RBI and auditors were as under :Copy of statement 2 in transparencygiven by Bank toChanged by RBICertified by AuditorsRBIAuditorsSustandard18.5477.86106.27As submitted by the Bank in Statement. 2 *Doubtful10.8442.9327.79Loss36.3120.5368.68Total65.69141.32202.74
81 V[GP5LPV[P GLR[ VM0L8;"GM ZLDFS" o s. f. ccVGZLV,F. h0. g8Z[:8G[ V[GP5LPV[P GLR[ VM0L8;"GM ZLDFS" o s!f ccVGZLV,F.h0 .g8Z[:8G[ .g8Z[:8 ZL;LJ[A, BFT[ pWFZL T[GL ;FD[ VMJZ0I] .g8Z[:8 ZLhJ" BFT] HDF SZJFDF\ VFJ[, K[ S[ S[D m T[ CJF,M RSF;MP VFJS TZLS[ NXF"J[, K[P sZf VFZPALPVF.P âFZF V[GP5LPV[P V\U[ .:I] SZJFDF\ VFJ[, UF.0 ,F.G D]HA A[\S V[GP5LPV[P ZHL:8ZDF\ SZ[, JUL"SZ6GL RSF;6L SZMP BFDLVM V\U[ lJUTJFZ VC[JF, SZMP VM0L8ZGM ZLDFS" o V[GP5LPV[P RSF:I]\P sVgI SM. ZLDFS" GYL f T[ H A[\SDF\ RBI o The Bank had not adhered to the IRAC norms as mentioned in Annex-V (Note : RBI had considered all accounts in which stock statements were not received for more than 3 months as NPAs)
82 Out of Which substandard Statement – 2Details of non performing assetsNoPositionNo of NPAsNPA Amount R.sOut of Which substandardDoubtfulLossProvision RequiredProvision madeNet NPA12345678910Beginning of the year39267.5818.187.6038.8354.0276.41Recovery during the yearUpgradation during the yearReschedulement during the yearWrite off during the yearBalance of NPAs out of those in the beginning of the yearNew NPAs this year15573.449.6835.33-18.307.741.92-NPAs of the end of the year547141.3277.8642.93205361.7678.3314.25
83 Loss assets constitute 90% of gross NPAs Bank had prepared staff accountability policy but had not considered the same for fresh slippage of NPAsStatutory audit for the year ending was carried out by CA awarding a classification which was generally in order; however it was not satisfactory in respect of irregularities observed in IRAC norms, credit appraisal post disbursement supervision under provisioning and inflated profit.
84 “31.03.11 ના અંતે કુલ મુદતવીતી બાકી રૂ. 93.96 લાખ હતાં” “બેન્કની પ્રગતિ એકંદરે ઠીક છે માર્કસને ધ્યાનમાં રાખીને ઓડીટ વર્ગ ‘ડ’ આપવામાં આવે છે.”“ ના અંતે કુલ મુદતવીતી બાકી રૂ લાખ હતાં”Overdue amounts are different from NPAsAll overdues may or may not be NPAsAll NPAs are not necessary overdues.
85 Bank had granted loan against mortgage of private limited CO's asset but charge is not registered in favour of bank at ROC.Equitable mortgage not created on property. Only undertaking on Rs.100 stamp paper taken.Stock statements not received for 2/3 months.Bank officials had not taken regular visits to verify stocks.Bank had not formulated a recovery policy.The general performance of the BOD requires improvement on non formulation of certain policies like investment / recovery / recruitment/ donation / staff accountability / KYC
86 Discrepancy in value of immovable property taken in mortgage: Sr. NoStatedRs in lacsValuationLoan AmountRs. In lacsDateValue19.5037.302622.1017.901231.706.093.50
87 ઓડીટર : એનેક્ષર સી7(2) : અન્ય બેન્ક સાથેના મેળવણા લાંબા સમયથી બાકી ખેંચાતી રકમો અંગે સ્પષ્ટતા મેળવો (જવાબ : પત્રક સામેલ છે)પત્રકમાં એક રકમ રૂ ની ગુજરાત સ્ટેટ કો.ઓ. બેન્ક સાથે તફાવતની જણાવેલ છે. (+) કે (-) દર્શાવેલ નથી. ડ્યારે રીઝર્વ બેન્ક ઓફ ઇન્ડીયાએ આ રકમને shortfall in provision ગણેલ છે. કારણ કે તે 1987 થી લેવાની બાકી છે.તેવી જ રીતે મેમ્બરશીપ ગીફ્ટની રકમ રૂ લાખ ની હોવાથી તે પણ shortfall in provision ગણેલ છે.સ્ટાફ ગ્રેજ્યુઇટી ની રકમમાં shortfall in provision રૂ. 29 લાખની ગણેલ છે.MMCB માં ડીપોઝીટ રૂ. 15લાખની shortfall in provision ગણેલ છે.(ઓડીટર : રોકાણો નોન પરફોર્મીગ નથી જેથી પ્રોવીઝનનો પ્રશ્ન નથી.)