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From: ALPESH+DEVESH=A. D. ASSOCIATES <adassociates2004@yahoo.com>
Subject: [aurangabad_ca] BANK BRANCH AUDIT-NPA QUERY
To: "THANE CA GROUP" <thaneCAs@yahoogroups.com>, "Aurangabad CA Study Group" <aurangabad_ca@yahoogroups.com>, "VADODARA CA GROUP" <vadodara_CA@yahoogroups.co.in>, "MISSION IS MORE IMPORTANT" <lucknowca_reinvented@yahoogroups.com>, "GLOBAL CA GROUP" <globalindianCAs@yahoogroups.com>
Date: Thursday, 1 April, 2010, 9:41 AM

 

LOAN AGAINST GOLD JEWELLERY   We are Branch Statutory Auditor of One of Nationalised Bank, .   Our Query: The Bank has Advances Scheme called "XXX BANK GOLD", the advances are given against security of gold, which is described as "DEMAND LOAN" under "SECURED LOAN". The scheme is operative all over the India in all the 1125 Branches of bank.   As per Scheme, Out of total value of gold, the bank keeps 25% margin and advances 75%  loan to loanee. As per loan scheme, the bank only debit interest on monthly basis to loanee account, but do not recover the same through out year, the loan account renews after one year, as per bank's scheme and circular. And grant new loan by revaluation of  Gold jewellery, as an option, or recover the full amount with interest at the end of the year.   The bank is cover with Core Banking services, and the software also do not show the interest overdue for more than 90 days to classify the same as NPA, and bank management argue that the scheme is operative all over India in same way, and can not be classify the account as NPA.   What stand we should take for Interest not serviced for more than 90 days.   Whether we can consider the NPA norms at par with loans against Deposit, KVP, NSC, LIC policy etc and not to consider the same as NPA?     Kindly reply urgently.   your valued advice whould be highly apreciated.   Thanks in advance.   CA. ALPESH SHAH  +  CA. DEVESH PARIKH = A.D.ASSOCIATES Chartered Accountants 205, Apollo Shopping Centre, Above Siddharth Hospital, Station Road, Virar(w).