Before issuing certificate for "Writing of Loans" to Cooperative Banks what are the guidelines / Checklist to be followed?
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Cooperative Bank Loans
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| Before issuing a certificate for write-off of loans in a Cooperative Bank statutory audit, the following checklist should be followed: 1. Verify Board Resolution: Confirm the bank's Board/General Body has passed a resolution approving the write-off as per the bank's bye-laws and applicable State Cooperative Society Act. 2. RBI/NABARD Guidelines: Cross-check compliance with RBI Master Circular on Income Recognition, Asset Classification and Provisioning (IRAC norms). 100% provision must have been made before write-off. 3. Check NPA Classification: Loan should be classified as Loss Asset (i.e., fully provided for) before write-off is recommended. 4. Legal Action Status: Confirm whether legal proceedings / SARFAESI action / DRT filing has been initiated for recoverable amounts — write-off should not mean waiver of recovery. 5. Board's Internal Policy: Check if the bank has a documented write-off policy and the loan falls within the eligible criteria (age of NPA, value, borrower status). 6. Borrower Background Check: Verify if the borrower is a wilful defaulter — separate RBI guidelines apply in such cases. 7. Technical vs. Actual Write-off: Distinguish between technical write-off (only from books, recovery still pursued) and actual write-off (full abandonment). Certificate wording should reflect this. 8. Reporting in Audit Report: Disclose aggregate write-off amounts, provision shortfall if any, and comment on adequacy of the write-off policy in the statutory audit report. |
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