BANK AUDIT - VERIFICATION OF CASH CREDIT
In CC accounts, some imp. points of attention:
1. no debits being diverted to pay any other loan. Chk thru cust id of other loans.
2. Where debit are going. Just read narrations carefully. If other than for buying of related stock,, it is diversion of funds.
3. Use ctrl+f n chk debit of insurance, insp, processing for renewals etc. debited or not.
4. If acc. opened 6m back, why insurance done so later.
5. Credit submissions must be at least 5 times of limit. Cross chk thru PL stat. and cr. total of cc acc.
6. Chk source of credits be from genuine sources.
7. In large cc acc., Demand from party, monthly list of creditors from his tally to calc. value of paid stock for monthly dp set n allowed. If excess allowed for 90 days, its npa.
8.
In insurance cover note of cc stock, chk:
-short
sum insured, be at least 125% of limit.
-bnk
clause
-type
of coverage like fire, theft etc. be there.
-no break in period of ins.
9.
Stock st.:
-whether
showing items at cost or sale price. Must be cost price only after itc.
-slow
n non movable items wch hv no value
-match last yr 31.3.2019 st. wd audited fin. if showing at sale price, means party hs availed excess dp.
10.
Renewals:
-Must
not be pending for more than 180 days. If so, its npa
-renewals must be only on latest aud. financials. Cross chk fig Of AFS wd dp etc.
11.
Party visit
-carry
stock. statments from branch n do at least 2-3 visits in nearby to party
premises to cross chk items wd stock inventory maintained.
-take purchase bill file n cross chk items rates for genunity of stock value submitted.
12. when u go there as such. Also chk the marks left there of annual or by annual inspection done by BM at this premise to chk that actual insp. was done by bm there.
13. Chk stock inventory in 3cd report submitted last yr n match it wd stock st. of 31.3.23 wch was base to allow dp for april, 2023.
14. Chk AFS bsheet items carefully to hv idea whether party hs current acc. or limits operating wd other banks too.
16. If credits in account st. are only to serve intt. Acc. Seems to be wilful defaulter.
17. Check rate of intt being debited to acc. must be as per sanction letter terms only linked wd product code changes.
18. Chk whether penal intt being debited to acc. for non receipt of stock st.
19. Penal intt debited for overdue of monthly intt debited.
20. If there is allowed ad hoc in limit. Chk the justification of need for ad hoc wd adequte sec. provided. And also power of BM to gv ad hoc wr as allowed by higher authorities.
21. Carefully chk the stock st. receipt proof wd date in branch. BM may take all monthly st. From a party just few days before stat of audit.
22. Chk gst regn details of cc limit on gst site to hv idea of items regd n returns filed updates.and other addl premises regd.
23. AFS gvn by party must hv udin and be enclosed wd 3cd and itr for that year. Read contents of 3cd reg. stock quantiry etc.
24. Health, qulity n genuoneness of prime n collateral security d bank. whether collateral sec. in the shape of LIC. Chk surrender value to bnk in lic ofc, NSC/KVP are assigned to bnk favour.Example
1 of Perpetuation of Fraud, Account Inherent Weak, Wilful Defaulter, Quick
Mortality/
Misuse of end use of KCC limits:
1. A farmer got kcc sanctioned on 01.04.22 of 3 lakh.
2. The full amt was transferred to his saving acc. on 01.04.22 from kcc. account.
3. On perusing saving account., I found that 1 lakh was trfd to his son for his edu. And 1.50 lakh was trfd to a friend farmer to promptly pay his kcc in same branch to avail 3% prompt subvention and rest 50000 was used to treat his wife treatment.
4.
Farmer only served intt debited reguarly.
Audit findings in above
1.
Both kcc Cases are wilful defaulters ad per 2015 cirular.
3.
Both account not entitled for any intt subvention. So cert. to be signed
subject to this
4.
Npa prov. will be 100%
5.
Reporting in lfar will be at RFA, Potential npa, fraud.
Example 2 of Perpetuation of Fraud, Account Inherent Weak, Wilful Defaulter, Quick Mortality/
Mr. A availed CC limit of 35 Lakh against stock of Daily Needs Store from SBI during FY 2020-21, SBA found below transactions while analysing CC limit statements & other linked saving accounts:
1. transfer of 1 Lakh to Mr. A's friend saving account in branch, for further payment of his KCC from his saving account.
2. transfer of 75000 to A's saving account, further used for wife for medical treatment from saving account.
3. transfer of 125000 to A's son in Mumbai for his house construction.
4. NEFT of 50000 to his share broker for buying equity shares of SBI.
Let
see whether above transactions will cover under Diversion of funds or Siphoning
of funds??
(w.r.t
master circular on wilful defaulters of dated 01.07.2015)
2.2.1 Diversion of Funds: The term ‘diversion of funds’ referred to at paragraph 2.1.3(b) above, should be construed to include any one of the undernoted occurrences:
(a)
utilisation of short-term working capital funds for long-term purposes not in
conformity with the terms of sanction;
(b)
deploying borrowed funds for purposes / activities or creation of assets other
than those for which the loan was sanctioned;
(c)
transferring borrowed funds to the subsidiaries / Group companies or other
corporates by whatever modalities;
(d)
routing of funds through any bank other than the lender bank or members of
consortium without prior permission of the lender;
(e)
investment in other companies by way of acquiring equities / debt instruments
without approval of lenders;
(f)
shortfall in deployment of funds vis-à-vis the amounts disbursed / drawn and
the difference not being accounted for.
Comments
Post a Comment