BU lost Rs 55 lakh in three years after opening a/c with private bank: CAG

Bangalore University (BU) has lost Rs 55 lakh since 2017 because it held a bank account with a private sector bank, according to a report by the Comptroller and Auditor General of India (CAG).

The CAG’s compliance audit for the year ending March 2020 has flagged the matter and asked the state higher education department to follow up on its instructions to fix responsibility and take action for not complying with guidelines and procedures stipulated by the state government.

Accepting the audit observations, the state government said in March 2021, as quoted in the report, “Though Bangalore University was legally constrained to procure the service of online fee collection from the State Bank of India which had succeeded in the tender process as lowest bidder, Axis bank which was (the) unqualified bidder had been awarded the procurement. This measure of the university blatantly infringes (on the) KTPP Act, 1999, and the rules made thereunder and attracts punitive action against the university.”

The higher education department has said it did not clear the varsity’s move to open the current account in Axis Bank.

What caused the loss?

The average time Axis Bank took to transfer the amount to the current account and then to the varsity’s SBI account resulted in the loss of interest amounting Rs 17.43 lakh for delays in stipulated seven days in the last three years.

The audit observed that the varsity invited closed quotations and did not consider the attractive offers made by other banks despite the varsity having bank transactions with SBI. It did not record the reason for preferring a private sector bank. Opening a current account instead of sweep in/sweep out account not only contravened the guidelines, but also resulted in loss of interest of Rs 37.79 lakh.

The university had opened the current account in Axis Bank in February 2017 to collect all types of fee online and entered an MoU that stipulated the time limit to transfer amounts collected online to the varsity’s account. But since the account was opened guidelines cited supra, the varsity was required to obtain permission from the principal secretary of the higher education department. But it did not take the approval.

Syndicate members raised objections

Some syndicate members and finance officers had objected to the move in the meetings for over a year. A committee formed under the V-C to look into the issue did not even meet once in the past year, it is alleged.

“The online payment was earlier with SBI, and university changed it to Axis Bank. Since then, we have been objecting as it is leading to financial loss to the university. But no action has been taken,” a member said.