J&K Bank pulled for not utilising land acquired during 2016-21

Jammu: The Comptroller and Auditor General (CAG) has pulled up J&K Bank Limited for not utilising the land worth over Rs 140 crore acquired during 2016-21 and recommended a proactive plan for its effective utilisation.
It also said the bank’s improper planning resulted into blockage of funds to the tune of Rs 22.78 crore and wasteful expenditure in hiring of premises for its units.
In its report on compliance audit for the year ended March 31, 2021, the CAG said the bank purchased lands valuing Rs 184.92 crore during 2016-21, out of which the land valuing Rs 140.22 crore could not be utilised.
The CAG said the compliance audit on management of fixed assets by the bank covering the period from 2016-17 to 2020-21 was carried out to examine issues relating to acquisition of land, construction, upgradation, modification related to civil and interior works, furniture, electrical works and hiring of the premises.

“As on 01 April 2016, the gross block of the fixed assets (land & building, furniture & fixtures and temporary wooden structures) of the bank was Rs 812.91 crore which increased to Rs 2,385.48 crore by end of March 2021. The net block of these assets as on 31 March 2021 was Rs 1,755.33 crore,” the report said.
In January 2017, the Board of Directors (BoDs) of the bank approved the policy for acquisition of premises on lease, rental and outright purchase basis.
The audit revealed that the bank purchased land valuing Rs 184.92 crore during 2016-17 to 2020-21 for opening its own business activities and training centres for staff. “Out of the land valuing Rs 184.92 crore acquired during 2016-17 to 2020-21, the bank could not utilise the land valuing Rs 117.72 crore at Ram Kishore Road, New Delhi and a land valuing Rs 22.50 crore at Pampore, Srinagar even after lapse of more than five years and three years respectively.”

Further, funds to the tune of Rs 22.78 crore utilised for the acquisition of the land and related construction activity at Rail Head Complex, Jammu remained blocked without any benefit accruing to the bank due to improper planning, the report said.

The CAG said there was wasteful expenditure of Rs 5.28 crore in hiring of premises while increase of lease rent in violation of the lease agreement led to extra expenditure of Rs 2.61 crore.

“Due to hiring of unfurnished premises, the bank had to pay lease rent of Rs 5.14 crore as it took considerable time in furnishing works leading to delay in relocation of business units. There were delays in execution of works, however, a penalty amounting to Rs 8.77 crore was not recovered from contractors,” the report said.
The CAG recommended that the bank may draw out a proactive plan so that land acquired can be effectively utilised.
The Board of Directors should be presented with the consolidated position of the estates on a periodic basis to facilitate prompt decision making and to ensure policy directives, wherever necessary, are issued, the report said, also suggesting hiring of furnished premises for business units (BU) so that delay and expenditure on interior works in case of shifting or closure of BU may be avoided.

It also called for putting in place a mechanism to monitor the ongoing works on a regular basis so that delay in execution of works is avoided and wherever required the penalty for delay may be imposed on the contractor.