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and creating various reports required for Audit and Inspection as well as for
statutory inspection. This procedure is time consuming, inefficient as well as
prone to errors and manipulations.
4.8 Coding
: It was observed that the implementation of the CBS in all the DCCBs
is not uniform with respect to even the codes allocated e.g. work class of users.
The work class coding for auditors was assigned as 200, 100 and 50 in various
banks. This was creating problems in porting the programmes across the banks,
if required.
The Punjab StCB has requested that the report writing option may be provided
to them with an access to the database. There was a suggestion that the MIS
server may be kept with the bank and data may be refreshed on weekly
intervals, so that they will be empowered to generate reports themselves
without depending on the ASP. Since the report programming process is kept
with ASP (M/s Wipro), it is taking lot of time, sometimes months together to
programme the required reports. The bank is of the opinion that with their
technical staff they can programme the reports themselves faster.
The main branch of the Punjab State Cooperative bank was visited and it was
found that the branch could not generate any reports that they need to submit to
their Head Office. The branch was using the trial balance print out to collate the
returns manually. This is a time consuming and suboptimal way of using CBS.
Further, there is no control over the usage of CBS in the branch. For example,
any user in the branch can change the interest rate on loans without the
permission of the branch manager or proper authority. This is resulting in a
situation which is prone to frauds.
4.9 Asset Classification:
Regarding asset classification it was understood that in
all the visited banks, the interest recoverable on loans was not calculated
accurately in the CBS. Hence, it was indicated that the computation of NPA in the
CBS was not possible in CBS. Panchakula CCB in Haryana was said to be giving
KCC as term loans instead of cash credit, which is said to be a reason for NPA
classification issues. However, irrespective of the issues, all the banks have
chosen to manually classify the loan accounts under various categories like
Performing, substandard, doubtful and loss assets. There are larger issue in
system generated NPA than to the technical issues, which include the urge for
containing the NPA to show a better picture of the bank, which is clearly visible.
4.10 KYC/AML
: With respect to KYC / AML the banks indicated that there is a
need for special software in the nature of Decision Support System (DSS) to
tackle the issues of KYC and AML with 72 specified alerts. However, it was
observed that the banks are creating more than one customer ID for the
customers for various types of accounts like deposit accounts and KCC, etc. This
is done mainly to avoid deduction of tax at source, which may expose the banks
to tax issues and penalties. The issue of risk categorization of the customers is
done based on the risk perception of the branch managers, manually. Punjab
StCB has indicated that they have created special KYC team to ensure compliance
with the KYC norms in the bank and also indicated that they were in the process
