K’taka govt sitting on loan arrears worth over Rs 10,000 crore from 1977, says CAG

Bengaluru: Karnataka has not recovered loans amounting to over Rs 10,000 crore given to its own departments and undertakings, which includes borrowings that go as far back as 1977, the Comptroller & Auditor General (CAG) has found.

The CAG report on Finance Accounts for the 2022-23 fiscal was tabled in the Assembly on Tuesday.

“In respect of old loans amounting to Rs 10,389.78 crore involving eight departments (21 loanee entities), recoveries of principal have not been effected during the past several years, which includes loans pending since the year 1977,” the CAG said.

According to the CAG report, the 21 loanee entities, most of them state-owned undertakings, have arrears of Rs 15,856 crore, which includes principal of Rs 9,380 crore.

The oldest arrears are from 1977 pertaining to loans given to the BWSSB and Karnataka State Seeds Corporation Ltd. The Electro Mobile India Ltd (Rs 3.63 crore) and Karnataka State Tourism Development Corporation (Rs 5.24 crore) have arrears from 1981.

Unspent balances

The CAG noted that there were 85 personal deposit (PD) accounts with an unspent balance of Rs 29,509.54 crore that were not closed as required under Article 286A of the Karnataka Financial Code.

In 2022-23, the CAG said Rs 32,201.44 crore was transferred to PD accounts. This included Rs 23,122.88 crore opened in June 2022 in the name of the managing director, Karnataka Mining Environment Restoration Corporation. While Rs 6,797.51 crore was withdrawn, there was an unspent balance of Rs 29,509.54 crore.

Similarly, the CAG found an unspent balance of Rs 12,925.31 crore in the bank accounts of single nodal agencies (SNA) pertaining to various centrally-sponsored schemes.

Guarantee Redemption Fund

In 2022-23, the state government came up with a ‘Guarantee Redemption Fund Scheme’ as per RBI guidelines. The government is required to make an initial contribution of a minimum 1 per cent of the outstanding guarantees provided for loans and 0.50 per cent every year thereafter. “During 2022-23, the state government had for the very first time transferred Rs 314 crore...and the entire amount has been invested in Government of India securities through RBI,” the CAG said.