Srinagar: Comptroller and Auditor General’s (CAG) report has disclosed that Rs. 456 crores released as interest subvention (IS) for restoration of livelihood of Kashmiri traders affected by the 2014 floods were diverted for settlement of loans of houseboat owners, assistance to DP Dhar Memorial Trust and others.
The relief on interest scheme devised under the Prime Minister’s Development Package (PMDP) was to help restoration of livelihood of traders, the self-employed persons and business establishments affected by the floods.
The CAG report says IS to the extent of Rs 0. 75 crore was also provided by Banks for 107 account holders ineligible under the scheme.
The audit report says, “an amount of Rs 456.26 crore had been diverted from the funds towards settlement of outstanding loan of 19 houseboat owners not affected by the floods. The amount was also used in clearing outstanding balance of interest on Kisan Credit Card scheme, Chief Minister’s Business Interest Relief Scheme and towards and M/s DP Dhar Memorial Trust”.
Financial assistance of Rs 39.15 lakh was disbursed to 425 business units and traders in excess of the prescribed limit, it added.
A provision of Rs 800 crore was made for IS in the PMDP 2016 to meet the challenge of livelihood restoration of business enterprises affected by the devastating floods. The scheme was to be restricted only to the units availing credit facility from banks for business purposes and affected by the floods.
Under the scheme 28,246 business units were identified by the Jammu and Kashmir State Level Bankers Committee (JKSLBC). These accounts were restructured immediately after flood of September 2014 for extension of financial assistance by way of IS.
Further, 50, 081 small traders, businessmen (having annual turnover upto Rs 10 lakh) identified by the Divisional Commissioner, Kashmir on the basis of recommendations of the concerned Deputy Commissioners were also to be provided financial assistance to the extent of 50 per cent of actual losses suffered by them.
Rs 617.92 crore to JKSLBC/JKBL, Rs 187.37 crore to the Chief Minister’s Secretariat and Rs 1.47 crore to the Director Tourism Kashmir were released between July 2016 to January 2019.
Although there was a provision for left over borrowers from institutions like SFC and NBFCs for which Rs 125 crore was earmarked, financial assistance to not even a single beneficiary had been provided under this provision, the auditor said.
He noticed that nine house boat owners who were ineligible borrowers benefitted by Rs 53.11 lakh in the form of IS.
Similarly, Ellaquai Dehati Bank provided Rs 21.46 lakh to 98 accounts not entitled under the scheme, he added.
The audit found that in January 2018, the Finance Department released Rs 1.47 crore to the Department of Tourism for waiver of loans in respect of 19 houseboat owners who had turned defaulters with banks for loans taken earlier as one-time settlement of these cases.
The Director Tourism Kashmir disbursed this amount to the banks for settlement of these loans, which were not eligible to be covered under the scheme as these houseboat owners were not affected during September 2014 floods and the waiver of these loans was a violation of the scheme guidelines, the CAG has said.
Similarly, M/s D P Dhar Trust under PMDP was never affected by the floods but got benefitted by Interest Subvention, said the report.
In December 2017, the J&K Bank had initially sanctioned a term loan of ` Rs 8.50 crore to M/s DP Dhar Memorial Trust for construction of a Centre for visually impaired children.
Although the Trust was never affected by the floods of 2014, it Trust was covered under the benefit of the Interest Subvention scheme under the PMDP. In May, 2018, the government of J&K sanctioned Rs 1.86 crore for the Trust to be disbursed through the J&K Bank. The interest subvention was to be released on annual basis.
The CAG observed in July 2019 that the J&K Bank commenced the disbursement of loan of Rs 8.50 crore in February 2018 to the Trust and also had released interest subvention of Rs 0.35 crore (19 per cent of the sanctioned amount of Rs 1.86 crore during the period between June 2018 to June 2019).
It also observed that the Trust had also been provided financial assistance of Rs 0.20 crore as subvention of 50 per cent of interest charged from 01 September 2014 to 31 December 2015 and five per cent interest subvention from 01 January 2016 to 30 September 2018.
The CAG observed, “there was no provision for release of assistance to a Private Trust in the Interest Subvention scheme, that too for one that has not been affected by the floods of September 2014 and has thus resulted in diversion of scheme funds of Rs 0.55 crore towards a private institution.
The Joint Director (Resources), Finance Department, J&K stated that the government released the amount in favor of the private Trust on the basis of requisition made by J&K Bank “as a policy decision and that it was done for a noble cause”.
The reply confirmed that funds released by the GoI for Interest Subvention scheme were diverted towards payment of interest subsidy in favour of a private trust, which was a violation of the scheme guidelines, said the auditor.
