 "CAG raps HUDCO for excessive mobilisation of over Rs 3,200 cr")
The Comptroller and Auditor General of India (CAG) on Friday rapped the Housing and Urban Development Corporation Ltd (HUDCO) for excess mobilisation of over Rs 3,200 crore leading to additional interest burden of about Rs 30 crore on the state-run firm.
It also pulled up HUDCO, which is under Ministry of Housing and Urban Poverty Alleviation (HUPA), for non-judicious mobilisation of funds with higher proportion of bank loans whose interest rates were higher than the other sources.
"HUDCO mobilised Rs 37,128.32 crore during 2010-11 to 2014-15, but the mobilisation was not judicious, on account of higher proportion of bank loan, which carried interest rates higher than those of funds from other sources by one to two per cent," the CAG noted.
"Assessment of requirement of fund was not made based on laid down policy or framework, and certain elements of funds inflow/outflow were not given due consideration resulting in excess mobilisation of Rs 3,277.96 crore and additional interest burden of Rs 30.39 crore," the CAG said in its report tabled in Parliament on Friday.
The public account watchdog said the incidence of extra expenditure of Rs 147.39 crore was also noticed due to lower credit rating and fixing of higher coupon rate.
It also highlighted the disparity between the disbursal and sanctioned loan during the last five financial years ending 2014-15, saying HUDCO disbursed between 38.40 and 69.72 per cent of total loans sanctioned during the period.
CAG also pulled it up for the increase in quantum of defaults and non-performing assets (NPAs) during the period.
"Deficiencies in internal guidelines also affected the quality of assets. Deficiencies in existing appraisal mechanism, system of disbursement, monitoring of financial projects and waiver of critical pre-disbursement conditions led to considerable loan accounts turning into non-performing assets, which were in the range of 5.46 to 6.76 per cent during the five year period," the report said.
"The amount in default increased from Rs 3,766.86 crore in 2010-11 to Rs 4,795.05 core in 2014-15, while NPAs increased from Rs 1,227.60 crore to Rs 2,029.33 crore during the same period," it said.
To improve its operations, the CAG recommended HUDCO to strengthen procedure for assessment of requirement of funds, ensuring mobilisation of funds in economical, efficient and effective manner and strengthening monitoring system for proper funds' utilisation, among others.
