In a peculiar example of its slapdash approach, the J&K government itself violated the terms and conditions of the interest subvention scheme, floated under the UT’s Business Revival Package 2020, as it (the government) provided its interest subvention) benefit to more than one account of the beneficiaries.
As a consequence, an ineligible benefit of interest subvention of Rs 59.21 Cr was extended to 39,136 accounts by providing interest subvention in more than one account.
Not only this, in yet another violation of norms, the benefit of interest subvention was granted to Kissan Credit Card (KCC) accounts under the personal segment, though they were not to be covered under the scheme.
Serious irregularities in the implementation of the interest subvention scheme under the Business Revival Package 2020 of J&K government have been flagged by the Comptroller and Auditor General of India in its compliance audit report, for the year ended March 2022, on Revenue and Public Sector Undertakings (PSUs) of J&K.
Censuring the UT government and its departments, the audit report observed that benefit was provided to more than one account of the beneficiaries as the J&K Finance Department neither framed the guidelines for implementation of the interest subvention scheme nor communicated the terms and conditions for release of interest subvention to the banks.
“The terms and conditions of the sanction orders for release of three tranches aggregating to Rs 750 Cr stipulated that only one account of beneficiary shall be eligible for relief under interest subvention. However, the J&K Finance Department, neither framed the guidelines for implementation of the scheme nor communicated the terms and conditions for release of interest subvention to the banks, as a result of which, benefit was provided to more than one account of the beneficiaries,” it observed.
Audit noticed that an amount of Rs 202.47 Cr was credited by the Jammu and Kashmir Bank Limited (JKBL) to 65,456 accounts.
Scrutiny of these accounts revealed that 30,019 beneficiaries, who had more than one account were provided a subvention of Rs 57.80 Cr.
This resulted in providing interest subvention of Rs 57.80 Cr to 35,437 ineligible accounts by the JKBL.
Similarly, the J&K Grameen Bank (JKGB) credited an amount of Rs 5.08 Cr to 7,151 accounts of 3,452 beneficiaries who had more than one account.
As a result, interest subvention amounting to Rs 1.41 crore was provided to 3,699 ineligible accounts of these beneficiaries by JKGB.
On being pointed out in the audit, the JKGB admitted in March, 2023 that as per the guidelines received from Union Territory Level Bankers’ Committee (UTLBC), there was no mention of any condition with regard to providing of benefit to only one account of the beneficiary.
“However, it can be seen that this condition was mentioned in the sanction of J&K Government of October 2020,” the audit report flagged.
The audit pointed out that the government while endorsing the replies of JKBL and JKGB in December, 2023, stated that the condition regarding disbursement of interest subvention to more than one account of the beneficiary was not mentioned in the sanction order.
“The government’s reply may be seen in light of the fact that all three sanction orders of the Finance Department contain the condition that only one account of the beneficiary was eligible for relief under the scheme,” the report revealed.
The audit also flagged interest subvention to KCC, Artisans Credit Card (ACC) and loans under personal segment in violation of norms.
It revealed that as per the sanction order in October 2020 for the scheme, interest subvention was not to be provided to borrowers under KCC, ACC, loan against deposits and loan under personal segments.
Audit observed that JKBL violated the conditions for the release of interest subvention despite the same being clearly mentioned in the original sanction order for the scheme. Scrutiny of beneficiary accounts revealed that benefit of interest subvention of Rs 1.91 lakh was granted to 10 KCC accounts which were not to be covered under the scheme.
It was also observed that JKBL provided the benefit of interest subvention of Rs 1.07 lakh to 22 accounts under the personal segment.
On being pointed out by audit in April, 2023, the government in December, 2023, replied that out of 10 KCC accounts, eight accounts were eligible under the scheme as these were wrongly opened in KCC GL Head and the recovery of Rs 1.41 lakh against the remaining two accounts would be made.
Further, it was stated that 22 accounts were eligible under the scheme as they were wrongly opened under GL Head ‘Personal Saholiat’ instead of GL Head ‘Saral Finance’.
“The reply of the government regarding extending of benefit of interest subvention to 22 accounts opened under Personal segment is not acceptable as at the time of extending the scheme benefit, these accounts were categorised under the personal segment, rendering them ineligible for the benefits as per the scheme guidelines,” the audit censured, adding that the scheme was formulated without conducting any survey with regard to its financial requirements.
WHAT WAS SCHEME AND WHY WAS IT FRAMED
Considering the difficulties being faced by the various sectors of the economy in Jammu and Kashmir, a committee was constituted in August 2020 by the Industries and Commerce Department, Government of Jammu and Kashmir, for preparing a proposal for relief and revival of the business sector in the Union Territory.
The Committee, in September 2020, submitted its report after deliberations with various business associations in the UT.
Based on the recommendations of the Committee, the J&K Finance Department in October 2020 approved scheme of interest subvention of five per cent for all borrowers, excluding borrowers under Kissan Credit Card (KCC), Artisans Credit Card (ACC), loan against deposits, loans under personal segments and Non-Banking Financial Corporation (NBFC) for a period of six months with effect from April 1, 2020.
The benefit under the scheme was to be provided to those borrowers whose accounts were standard as on July 31, 2019 or March 31, 2020, whichever is applicable.
The scheme also provided for pending interest subvention under the rehabilitation schemes of 2014 and 2016. The scheme was floated by J&K Industries and Commerce Department whereas the Finance Department was the implementing agency and the Union Territory Level Bankers’ Committee (UTLBC) acted as a monitoring agency for the scheme.
J&K Finance Department in October 2020 approved the Business Revival Package with financial implication of Rs 950 Cr for the Interest Subvention Scheme of 2020 and an amount of Rs 139.24 Cr for rehabilitation schemes of 2014 and 2016.
J&K Finance Department, however, released Rs 750 Cr in three tranches during October 2020 to May 2021 to UTLBC, which included an amount of Rs 138.03 Cr, earmarked for rehabilitation schemes of 2014 and 2016.
As per the audit, out of Rs 750 Cr, an amount of Rs 526.50 Cr was utilised towards five per cent Interest Subvention Scheme of 2020 and an amount of Rs 137.75 Cr was utilised for the Interest Subvention Schemes of 2014 and 2016.
