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CAG finds ‘lapses’ in farm loan waiver

The Comptroller and Auditor General of India (CAG) has said that 8.5 per cent beneficiaries who availed of the farm loan waiver scheme

Written by Express News Service | New Delhi | Published: March 6, 2013 1:35:30 am

The Comptroller and Auditor General of India (CAG) has said that 8.5 per cent beneficiaries who availed of the farm loan waiver scheme were “not eligible for either debt waiver or debt relief”. The report was tabled in Parliament on Tuesday.

The CAG report is based on scrutiny of over 80,000 accounts of beneficiaries across 25 states. Alarmed by significant proportion of “ineligible” beneficiaries,the CAG has recommended that the “bank officials,internal auditors and central statutory auditors” who approved the relief claims should “be made accountable for lapses in performaning their duty”.

The government has spent over Rs 52,000 crore on the scheme announced ahead of the 2009 general elections. It is estimated to have benefited about 3.45 crore farmers.

The CAG report has highlighted “lapses” in the form of “violation of guidelines”,where the cash benefit was “credited,not to individual accounts,but to the account of the MFI” (micro finance institution),adding that there was no “reasonable assurance” to show that the “benefits of such waiver were extended” to the farmers.

The report has also found that a private scheduled commercial bank received reimbursement for loans adding up to Rs 164.60 crore,that were extended to MFIs in violation of the guidelines.

The CAG,using a smaller sample of 9,334 accounts across 14 states,found that about 13.46 per cent of eligible farmers could not avail the farm loan waiver. It recommended the government “take steps to review the beneficiary list in select banks by focusing on those states where indebtedness was high”.

The CAG has criticised the Department of Financial Services,saying it was “totally dependent on nodal agencies” for the compliance of its directives,while the nodal agencies were “relying on certificates and data of lending institutions without conducting independent cross checks” to “confirm the veracity of claims”.

“This raises the issue of conflict of interest,since in effect,the lending institutions were performing dual roal,first implementing and then monitoring their own work,” the CAG has said. It recommended that the Finance ministry should “verify” cases where “high-value claims of reimbursement” were made. It has said the government should verify “a sample of claims of lending institutions”.

The CAG also deplored that in about 34.28 per cent cases,the banks did not obtain acknowledgement from the beneficiaries that could make them eligible for fresh credit.

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