The Comptroller and Auditor General of India (CAG) has rapped Jammu and Kashmir Bank for various lapses, including not adhering to a uniform rate of interest on term loans advanced by the bank.
"In respect of term loan accounts where recovery is made on monthly and quarterly basis, the interest parameters have to be flagged in the system. Audit analysis of data revealed that the interest parameters of term loan accounts were not uniform and the instructions on this account were not being followed by the branches," the CAG said.
A performance audit of information technology systems in the bank for the year ended March 2006 revealed that all the 26 branches test-checked were found to have skipped parameters relating to interest demand on overdue principal and corresponding interest elements.
System-setting in this regard had either been partial or had been ignored completely, it said.
Simultaneously, the penal interest rates had been found missing in all branches, non-specifying of which results in calculation of interest on overdue amounts even after correct paramterisation.
Data analysis of eight branches revealed that parameters in respect of 3,726 accounts (June 2006) under various loan schemes were not set as per the instructions.
