The CAG report for the year ending March 2011 said that the Bank sacrificed Rs 19.41 crores due to settlement of Rs 43.50 crores of non-performing assets (NPA) for a loan of Rs 45 crores to Hassan Sons.
"J&K Bank sanctioned return loan of Rs 45 crores in favour of Hassan Sons for acquisition of land measuring 940 kanals (over 117 acres) and development of a housing colony at Zapora-Naseem Bagh area in Srinagar city against preliminary security of hypothecation of all material and machinery at site, collateral security of land valued not less than Rs 50 crores and personal guarantee of all partners of the firm", the CAG report said.
The loan, to be repaid completely during 2008-09, could not be disbursed in favour of the borrower as the firm did not have a clear title over the land offered as a collateral oral security and the sanction lapsed, the report said.
The Bank subsequently revalidated the sanction in November 2005 and accepted another land valuing Rs 33 crores, it said, adding, the bank released Rs 45 crores in December 2005.
The audit observed that despite lapse of two and a half years the borrower neither executed the project nor repaid the loan suggesting that the borrower was a wilful defaulter.
