The Comptroller and Auditor General (CAG) has pointed out gross mismanagement of funds by Karnataka Industrial Areas Development Board (KIADB). After irregularly depositing Rs12 crore with a nationalised bank, the KIADB has not been able to encash it even after the maturity date.
The CAG said KIADB had deposited Rs 12 crore for a term deposit of one year with the Punjab National Bank (PNB) Rajajinagar Branch at an interest rate of 9.75 per cent in September 2011. The FD receipt was issued by Sankari West Branch of PNB in Salem in Tamil Nadu and the KIADB accepted the same.
In September 2012, when KIADB sought credit of the proceeds into its account on maturity of the FD, the PNB Rajajinagar branch asked it to contact the Salem branch directly. The CAG said the PNB, in a letter to the KIADB, said the deposit was transferred to the Salem branch on the request of the Board. According to the report, the Rs 12 crore was not received till December 2013.
It said that when the cheque was handed over to PNB, Rajajinagar, the manager gave an undertaking which stated that the maturity proceeds would be paid either through a banker’s cheque or a pay order. If this was not done, the bank agreed to pay interest at 18 per cent per annum for the days of default. Ordinarily, such undertakings are not given by any scheduled bank on receipt of a fixed deposit. “Obtaining of such an undertaking suggested that the depositor was doubtful of the fructification of this deposit,” it said.
While it was not clear how and why the KIADB accepted the FDR issued by another branch of the bank, the matter was investigated by the CBI at the instance of the bank. The executive officer of KIADB said the board had resolved to file a recovery suit against the bank and also launched a departmental inquiry against two officials as recommended by the CBI, the report said.