HFC loan disbursement improper,says CAG reporthttps://indianexpress.com/article/cities/chandigarh/hfc-loan-disbursement-improper-says-cag-report/

HFC loan disbursement improper,says CAG report

Even after 40 years of its operation,the Haryana Financial Corporation has no system to formulate long term plans for its operations.

Even after 40 years of its operation,the Haryana Financial Corporation (HFC) has no system to formulate long term plans for its operations. Appraisal of loan applications and their monitoring has been found to be defective due to lack of requisite systems. The Corporation has even failed to mobilise sufficient funds during the five-year period ending 2008 for its business operations,as pointed out by the CAG.

According to its report,the targets for sanction and disbursement of loans were also not met. The shortfall as compared to targets in disbursement of loans ranged between 9 to 83.24 per cent during the period from 2003 to 2008.

It was noticed that the spread of loans among various districts tilted towards the National Capital Region (NCR),hindering a balanced industrial growth in the state. The percentage of recovery against amount recoverable decreased from 12.27 per cent to 7.87 per cent during 2003-08. Similarly recovery of old dues decreased from 4.94 per cent in 2003 to 1.76 per cent in 2008. Due to non-recovery,loss assets of Rs 87.43 crore were written off during 2007-08.

The Corporation failed to properly monitor the loan cases due to lack of a system for reviewing the financial statements of the loanees,inspecting their units,appointing its nominee on the Board of loanee units and non-renewal of the insurance of primary securities,according to the CAG report.

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The Haryana Financial Corporation failed to evolve any mechanism to evaluate the impact of financial assistance on industrial growth. No separate targets for recovery of old dues were fixed to monitor their recovery.The level of non performing assets (NPA) was high and the process of recovery of old dues through collectiors was ineffective and very slow.

The Corporation had not evolved any system of collection/analysis of balance sheets/working results of loanee units to know their financial health. CAG suggested that the HFC should put in place a system of resource planning to achieve its targets and objectives. It must ensure the spread of loans cover all the regions in the state for balanced growth.

The Corporation should also evolve a mechanism to evaluate the impact of financial assistance on industrial growth.

Besides,the corporation should devise a suitable system for regular feedback of the operational/financial performance of the loanee units and bring down the percentage of NPA by taking up recovery cases with the revenue authorities.

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