The report revealed that more than 52 per cent of the bank’s total loans have become Non-Performing Assets (NPAs) as of March 31, 2023
A recent audit report by the Comptroller and Auditor General (CAG) has raised serious concerns over the financial health of the State Bank of Sikkim (SBS). The report revealed that more than 52 per cent of the bank’s total loans have become Non-Performing Assets (NPAs) as of March 31, 2023.
According to the report, SBS had total loans of around Rs 3,220 crore, out of which Rs 1,682 crore was not being repaid by borrowers. This means more than half of the money lent by the bank is stuck as bad loans, which is an alarming situation for any bank.
The audit found that the bank followed poor loan approval practices. Loans were given without proper background checks, income verification, or assessment of repayment capacity. In many cases, loans were sanctioned without adequate security or collateral. The bank also failed to regularly monitor loan accounts after disbursal.
The CAG report further pointed out that loan recovery efforts were weak and irregular. Legal action was often not taken against defaulters, and follow-up on overdue loans was minimal. Due to these lapses, the number of bad loans kept increasing over the years.
The report warned that such a high level of NPAs can severely affect the bank’s financial stability and profitability. It may also reduce public confidence in the bank if corrective steps are not taken urgently. The CAG has recommended stronger controls, better loan appraisal, and strict recovery measures to improve the situation.
Earlier also, the Comptroller and Auditor General of India (CAG), flagged serious irregularities in the recruitment process of SBS.
In its Performance Audit for the year ending March 2023, the CAG examined the recruitment process initiated through an advertisement issued on 25 May 2021. Against 26 Assistant Manager posts, SBS received 3,513 applications, of which 2,270 candidates appeared for the written examination. However, only 69 candidates were shortlisted for interviews, and 26 were finally selected in February 2022.
