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CAG Revelation on SBS : Rs. 84.90 cr of demonetized notes deposited, 40 times excess withdrawal

CAG Revelation on SBS : Rs. 84.90 cr of demonetized notes deposited, 40 times excess withdrawal

CAG Revelation on SBS : Rs. 84.90 cr of demonetized notes deposited, 40 times excess withdrawal

Gangtok , 19 Jul (SE) : State Bank Of Sikkim SBS operates autonomously without coming under ambit of Reserve Bank of India since state of Sikkim merger with Union of India in 1975 which is constitutionally protected under provision of Article 371 F.

A sum aggregating Rs. 84.90 crore of the old currency notes of denomination of Rs. 1000 and Rs. 500 was deposited in State Bank of Sikkim (SBS) during the demonetization period, reveals the Comptroller & Auditor General (CAG) in its report for the year ended March 2017.
The demonetization of Rs. 1000 and Rs. 500 notes (referred to as Specified Bank Notes or SBNs) was announced on the evening of November 8, 2016 by the Government of India. People had been advised to exchange or deposit the demonetized notes to the banks between November 9 and December 30, by providing necessary details of the cash holdings so deposited/exchanged.
Scrutiny of the records of SBS revealed that during the period from November 9, 2016 to December 30, 2016, a sum aggregating Rs. 84.90 crore of the SBNs (old currency notes of Rs. 1000 and Rs. 500) was deposited in SBS, reports the CAG.
The audit body also highlights violation of the directives of the Union government by the SBS regarding the quantum of cash withdrawal during the demonetization period.
Test check of records further revealed that during the period from 9-13 November 2016 and 14-20 November 2016, there were 40 instances of cash withdrawal from the SBS beyond the prescribed weekly limits of Rs. 20,000 and Rs. 24,000 respectively, the CAG reports. The withdrawals by the individual account holders during the said periods (9-20 November 2016) ranged between Rs. 25,000 and Rs. 1,48,000.
In reply, the SBS told the CAG (November 17) that cases of excess withdrawal in 40 cases had happened due to ignorance of its employees and accordingly, the said employees have been show caused/cautioned by the SBS.
The reply was not tenable as irregularity in withdrawal of cash by the SBS employees beyond the prescribed limits was indicative of non-existence of an effective internal control mechanism necessitating immediate steps to strengthen the internal controls in the SBS.
During the demonetization period (November-December 2016), all the eight ATMs of the SBS were non-functional and the ATMs could be made operational only in November 2017, after a period of one year.
The reasons for all the eight ATMs lying defunct for such a long period was attributable to delay in recalibration of the cash cassettes of the ATMs in accordance with the size of new currency notes of Rs. 2000 and Rs. 500 denomination, the CAG reports. It was also attributable to pending migration of SBS to new software (core banking solution) since April 2017, which required fresh integration. Non-functioning of SBS ATMs for such a long period had caused hardship to the customers, the CAG said.

More ATMs suggested
As of March 31, 2017, there was a total of 193 ATMs in Sikkim. Among them, the SBS had only eight ATMs.
Thus, the contribution of SBS in the ATMs available in the State was a meagre 4% of the total ATMs in Sikkim. The SBS could provide only one ATM against the average population of 76,322 persons in the State as a whole. As such, there was scope for further expansion in the number of ATMs to serve the needs of the State population, the CAG observes.

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