General Account Reconciliation Position of Rupali Bank Ltd
Subject: Finance | Topics:

PART- A

FINDINGS ON HEAD OFFICE

FINDINGS # 01

 RUPALI BANK LTD. GENERAL ACCOUNT (INTER BRANCH TRANSACTION ACCOUNT) RECONCILIATION POSITION.

Fact:

Inter branch transaction account has not been reconciled fully. A number of un-reconciled entries remained unadjusted. The total unreconciled debit  balance of Tk. 67261.60 million and unreconciled credit balance of Tk. 66846.57 million resulting net debit balance Tk. 415.04 million. Details given below :

Particulars

Taka

Debit balance :
Head Office Account

66,736,501,417

Branch Account

525,103,576

Total

67,261,604,993

Credit Balance :
Head Office Account

39,901,383,800

Branch Account

26,945,184,356

Total

66,846,568,156

Net Debit balance

415,036,837

 Implication/Risk:

 It indicates lack of internal control over the management of inter branch transactions and as a result the bank may run the business in the risk of suffering financial loss due to non reconciliation and non adjustment of inter branch transactions.

 Recommendation:

 The bank should exercise proper control over the workings of the reconciliation function and take initiative for reconciliation and adjustment of all outstanding entries on a top priority basis.

FINDINGS # 02

TAX DEDUCTED AT SOURCE REMAIN UNADJUSTED

 Fact:

We found from note. 9.02 that amounting Tk. 3187.14 million remaining unadjusted from 1989. Details given below:

Year Taka
198944,068,781
199038,504,764
199141,786,506
199276,063,071
199334,926,562
199443,209,672
1995104,218,562
1996393,873,131
1997112,265,922
1998102,706,641
1999210,593,853
2000245,861,714
2001230,161,787
2002275,942,197
2003223,304,594
2004107,614,028
200593,376,676
200688,693,685
2007384,428,714
2008243,303,526
200957,388,938
201034,846,322
Total3,187,139,646

 Recommendation:

Management should take necessary steps to realize the amount from NBR.

FINDINGS # 03

FIXED ASSETS RECORD/REGISTER WERE NOT MAINTAINED PROPERLY

 Fact:

The record/register of all the fixed assets of the bank was not maintained properly as some of the important information related to fixed assets like, location, reference no, identification no, date of acquisition/purchase, condition of assets etc. were not available in the fixed assets register.

 Implication/Risk :

It indicates weakness in fixed assets management.

Recommendation:

Management should record all information related to Fixed Assets in the Fixed Assets Register.

FINDINGS # 04

STATIONERY MANAGEMENT PROCEDURE

Fact:

During our audit we found the following irregularities regarding stationery management:

  1. Physical verification of stock of stationery was not conducted by the branch management;
  2. Stationery Register was not maintained regularly; and
    1. While conducting our audit, we found some differences between Stock register and physical verification of stationery.

 Implication/Risk:

  1. It indicates non-compliance with the policy of the bank regarding stationery management;
  2. The existence of stationery on any particular date can not be ensured; and
  3. It may enhance scope of misuse of stationeries.

 Recommendation:

The bank should take initiatives to ensure control over stationery management.

FINDINDS # 05

INTERNAL AUDIT

 Fact:

Branch internal audit reports are as usual. This reports are not identified the weakness of branch in application of circulars and orders of Bangladesh Bank and other Regulatory authorities. In many cases we found that there is no recommendation about the classification of loan and advances, eligible security against loan and advances, recovery of loan and advances.

Implication/Risk

Actual situation of branch not disclosed in the internal audit report.

 Recommendation:

 Management should take necessary steps in this regard.

 FINDINDS # 06

MEMORANDUM OF UNDERSTANDING (MoU) ON OPERATING EXPENSES

 Criteria:

As per condition no. 10 of Memorandum of Understanding (MoU) of Board members of Rupali Bank Limited with Bangladesh Bank stated that “Operating expenses for the year 2010 shall be reduced rationally and shall not exceed the year 2009 level.”

Fact:

 Our audit revealed that operating expenses amounting to Tk. 420,681,421 has been over expended the approved limit according to MoU during the year under audit. Details are given below:

Particular

Expenses for the year 2009

As per (MoU) with BB for this year

Actual expenses for the year 2010

Difference

(Tk.)

Operating expenses

  1,922,283,649  1,922,283,649

2,342,965,070

                420,681,421

 Implication / Risk

It is the non-compliance of Memorandum of Understanding (MoU).

Recommendation:

Management should take necessary steps to follow Memorandum of Understanding (MoU) of Board members of Rupali Bank Limited with Bangladesh Bank specific condition no. 10 regarding operating expenses.

FINDINDS # 07

BUDGET PREPARATION AND MONITORING

Fact:

No specific division for preparing and monitoring budget. This is necessary to achieve the targets and to control the expenses of Bank

 Risk:

This indicates the weakness of internal control.

 Recommendation:

To increase the effectiveness and efficiency of following budget, management should take necessary steps in this regard.

 FINDINDS # 08

 BALANCE OF SUSPENSE ACCOUNT REMAIN UNADJUSTED

 Fact:

Balance of suspense account remains unadjusted for a long time. Details are given below:

Particulars

2010

Taka

Demand drafts paid without advice

153,551,735

Foreign drafts paid from suspense account

10,367,024

WES Fund purchased        102,029,648
Sundry Debtors

478,166,113

Total

744,114,520

 Recommendation:

Management should take necessary steps in this regard.

FINDINDS # 09

CAPITAL ADEQUACY RATIO (CAR)

 Fact:

Capital Adequacy Calculated by Auditor:

(Fig in Million)

Particulars of available capital

Tire- 1            Core Capital

Tire – II Supplementary Capital

Total

(Taka)

Core Capital

1

Paid up Capital

1250.00

1250.00

2

Share deposit

74.95

74.95

3

Statutory reserves

1535.38

1535.38

4

General reserves

513.3

513.3

5

Retained earnings

315.15

315.15

6

Minority interest in subsidiaries

7

Non-cumulative irredeemable preference shares

Sub Total:

3688.78

3688.78

Supplementary Capital

1

General provision (1%of unclassified loan & off-Balance Sheet Exposure)

                 –

1436.94

1436.94

2

Assets revaluation reserves

               –

1072.78

4792.62

3

Exchange equalization accounts

               –

27.99

27.99

4

All other preference share

               –

5

Perpetual subordinate debt

               –

Sub Total:

              –

2537.71      

2537.71      

Total capital available

3688.78

2537.71

6226.49

Core Capital (Tire – I ) :

Capital Available x 100

6.51%

 

Risk Weighted assets

(Risk Weighted Assets = 56632.20 million)
(Minimum requirement 5% of RWA.)
Supplementary Capital (Tire – II ):

Capital Available x 100

4.48%

 

Risk Weighted assets

(Risk Weighted Assets = 56632.20 million)
(Minimum requirement 5% of RWA.)
Total Capital (Minimum requirement 10% of RWA.) 

10.99%

Capital Adequacy Ratio
  

Particulars

Required

Held

Surplus /

deficit

Core Capital (Tire – I )

5%

6.51%

1.51%

Supplementary Capital (Tire – II)

5%

(Not Mandatory)

4.48%

(0.52%)

Total                                                                         

10%

10.99%

0.99%

  
Total Capital:
i)Capital required @ 10% on the risk weighted assets

5663.22

ii)Total capital available

      6226.48

iii)Capital surplus

563.26

iv)Total shortfall by other adjustments not considered in the account

   –

 

Total Surplus  

563.26

FINDINDS # 10

BOARD DIRECTOR’S FEE

Fact:

As per BRPD circular no – 03 dated 18 January 2010, the above limit of director’s fee of any bank is Tk 5,000 per meeting. But the bank bears Tk.5,000 in cash and VAT Tk. 750 total     Tk. 5,750 for each director per meeting during our audit period.

 Risk:

It indicates the non-compliance of BRPD circular no: 03.

Recommendation:

Management should take necessary steps in this regard.

FINDINDS # 11

INFORMATION TECHNOLOGY (IT) SYSTEM

 Fact:

During our audit we observed that the existing IT system was not up to date as compared to technology based banking systems implemented by various Banks in Bangladesh. In some cases the existing system was unable and insufficient to provide full and correct information.

 Implication / Risk:

  1.                               i.          Details analysis is not possible for management decision;
  1.                             ii.          It is difficult and time consuming to prepare the statement from register and documents Maintained manually; and
  1.                           iii.          Lag behind from competition in modern banking system due to not using online banking system.

 Recommendation:

The bank management should develop the bank’s IT system as required modernization of banking system. The management should also introduce computerized system in those branches where it has not yet been introduced and should increase the number of computers and efficient operators at various branches and Head office.

PART-B

FINDINGS ON BRANCHES

FINDINDS # 12

PROVISION PROCEDURE FOR LOANS AND ADVANCES

Fact:

During our audit we observed that provision for loans and advances not shown in profit / loss account of branches. So the actual position of the branches not found from the Financial Statement.

Recommendation:

Branch should include the amount of provision in the financial statement.

 FINDINGS # 13

BALANCE OF LOANS AND ADVANCES EXCEEDED THE SANCTIONED LIMIT

Fact:

During our audit we found that in some cases loans and advances exceeded the sanctioned limit. Some instances are given below:

Branch Name

Party Name

Sanctioned Limit

Outstanding Amount

B. B. Avenue Br.Dewan Safiq

61,065

425,488

Ahmad Abdur Rouf

10,000

82,838

Rupali Sadan Corp. Br.M/S Eastern Agencies

25,000

307,564

M/S New Dhaka hand loom factory

25,000

102,453

Ramna Crop. Br.Khan Electronics

700,000

1,079,935

Maigdiee Tanary Ltd.

1,500,000

1,800,000

 Implication/Risk

  1. It indicates non-compliance with relevant BRPD Circular; and
  2. Assets have been overstated in the Balance Sheet.

Recommendation:

The bank management should take necessary steps to control over Loans and Advances. So that loan limit does not exceed the sanctioned limit.

 FINDINGS # 14

FIXED ASSETS RECORD IN THE BRANCH NOT MAINTAINED PROPERLY

Fact:

While checking branch accounts we found the following irregularities committed in fixed asset management:

  1. Costs of fixed assets are not available in ledger.
  1. As per closing circular of the Bank, the branch management should conduct physical verification of fixed assets at least once in a year. We found that no branch has complied with the said circular.
  1. In some cases fixed assets register was not prepared / updated regularly.
  2. In some cases identification number was not mentioned on fixed assets.

Implication/Risk

  1. It indicates non-compliance with the policy of the bank regarding fixed assets management.
  2. It may enhance the scope of misuse of fixed assets.

Recommendation:

Necessary steps should be taken to strengthen control over fixed assets and conduct yearly physical verification of fixed assets.

FINDINGS # 15

DAILY CASH BALANCE EXCEEDED THE APPROVED LIMIT

Fact:

During our audit we found that in most of the cases cash in vault exceeded the approved limit as fixed by Head Office. Some instances are given below:                                                                                                                                       Figures in Lac

Branch NameDateHolding CashApproved LimitExcess over Volt Limit
Ramna Crop. Br.

18.02.2010

41.09

37.47

3.62

20.03.2010

52.02

39.93

12.09

05.07.2010

53.01

39.93

13.08

24.08.2010

64.33

40.25

24.08

09.12.2010

38.58

37.47

1.11

29.12.2010

46.08

37.62

8.46

Foreign Exchange Crop. Br.

28.01.2010

2,293.84

612.60

1681.24

05.05.2010

1,413.68

650.72

762.96

31.07.2010

1,291.89

742.11

549.78

09.10.2010

1,912.14

709.39

1202.75

08.12.2010

2,735.94

596.98

2138.96

Branch NameDateHolding CashApproved LimitExcess over Volt Limit
Thana Road Branch, Bogra.

31.01.2010

1110.86

26.12

1084.74

28.02.2010

436.17

26.58

409.59

11.03.2010

240.91

32.90

208.01

12.04.2010

308.75

26.23

282.52

30.06.2010

757.02

29.23

727.79

13.09.2010

461.04

49.72

411.32

29.09.2010

530.08

18.94

511.14

14.11.2010

326.51

38.35

288.16

30.11.2010

889.77

37.57

852.2

30.12.2010

511.74

31.42

480.32

Baburhat Br. Narayangonj.

18.01.2010

22.17

8.40

13.87

04.02.2010

26.71

9.05

17.66

11.05.2010

37.79

10.52

27.27

15.06.2010

45.52

9.63

35.89

28.06.2010

36.56

10.81

25.75

31.12.2010

32.94

6.81

26.13

Bangshal Br. Dhaka

04.01.2010

22.90

12.08

10.82

10.02.2010

62.00

14.16

47.84

03.06.2010

49.83

42.99

6.84

05.09.2010

61.25

10.67

50.58

28.12.2010

66.43

28.09

38.34

Brahmanbaria Br. Comilla.

18.01.2010

40.58

8.50

32.08

12.04.2010

43.08

8.88

34.20

10.08.2010

53.65

14.03

39.62

22.11.2010

54.62

16.81

38.81

30.12.2010

39.11

14.13

24.98

Choto Bazar Branch, Mymensingh.

19.05.2010

245.59

30.29

215.30

25.05.2010

215.55

31.36

184.18

28.06.2010

270.87

15.46

255.40

29.06.2010

381.50

15.90

365.34

22.09.2010

260.03

46.85

213.17

Faridpur Br. Faridpur.

30.05.2010

242.83

36.18

206.25

27.06.2010

286.92

43.18

243.74

28.06.2010

312.52

43.18

269.34

23.09.2010

182.46

36.23

146.23

30.12.2010

250.43

40.68

209.75

Branch NameDateHolding CashApproved LimitExcess over Volt Limit
G L Roy Road Br. Rangpur.

19.01.2010

203.34

11.71

191.63

23.03.2010

185.96

03.08

182.88

25.03.2010

216.16

09.45

206.71

09.05.2010

156.57

21.90

134.67

13.07.2010

176.82

15.84

160.98

30.08.2010

274.37

18.81

255.55

Gabtoli Br. Bogra.

31.05.2010

15.55

8.12

7.43

30.06.2010

22.58

6.63

15.95

05.07.2010

31.70

7.37

24.33

27.09.2010

24.38

6.40

17.98

30.12.2010

10.09

6.09

4.00

Gulshan Br. Dhaka.

27.01.2010

71.35

59.83

11.52

28.03.2010

95.53

24.72

70.80

30.06.2010

84.28

57.29

26.99

29.08.2010

112.73

40.20

72.52

28.11.2010

74.78

59.68

15.10

Haragasa Br. Rangpur.

24.02.2010

23.64

8.19

15.45

26.04.2010

34.70

8.19

26.51

12.07.2010

33.16

8.19

24.97

22.09.2010

27.27

8.19

19.08

03.10.2010

27.93

8.19

19.74

22.12.2010

34.47

8.19

26.28

 

Branch NameDateHolding CashApproved LimitExcess over Volt Limit
Kustia Br. Kustia.

21.06.2010

66.42

19.95

46.47

15.07.2010

51.66

15.84

35.81

05.09.2010

78.63

70.25

8.37

24.10.2010

56.78

17.44

39.34

07.11.2010

69.84

24.42

45.51

Madaripur Br. Faridpur.

21.01.2010

37.77

14.54

23.23

25.02.2010

26.39

13.43

12.96

13.05.2010

22.15

11.93

10.22

08.07.2010

36.66

16.86

19.80

Maidandighi Br. Dinajpur.

17.08.2010

9.49

8.23

1.26

29.08.2010

9.72

7.25

2.47

08.09.2010

11.89

7.93

3.96

Market Br. Moulavibazar.

25/01/2010

18.67

6.32

12.35

02/02/2010

20.43

6.27

14.16

25/03/2010

14.70

6.83

7.87

18/04/2010

16.91

6.69

10.22

Mirabazar Br. Sylhet.

06.01.2010

22.19

15.65

6.54

10.03.2010

25.73

16.70

9.03

23.04.2010

26.42

17.12

9.22

23.06.2010

40.29

17.56

22.73

Narsingdi Br. Narayangonj.

10/03/2010

41.34

12.39

28.95

25/05/2010

65.71

14.35

51.36

14/07/2010

52.00

13.86

38.14

Nimtala Br. Diajpur.  02/06/2010

23.92

7.80

16.12

06/06/2010

27.86

7.80

20.06

10/06/2010

26.99

7.80

19.19

30/12/2010

104.93

40.31

64.62

Implication/ Risk

  1. It indicates non-compliance with policies and instructions of the Bank; and
  2. It reflects weaknesses in internal control system.

Recommendation:

Bank should ensure compliance with the approved cash holding limit or refix the daily cash holdings according to the need of branches.

FINDINGS # 16

DEMAND DRAFT (DD) PAID WITHOUT ADVICE FOR LONG TIME

 Fact:

While checking payment Demand Draft (DD) we found that, in some cases Demand Draft (DD) paid without advice for long time. But the management of the branch did not take any initiatives for collecting advice.

Implication/ Risk

Payment of Demand Draft (DD) without receiving the advice financial anomalies/complicacy may arise.

Recommendation:

Steps should be taken to collect advice before payment.

FINDINGS # 17

INSURANCE POLICY WAS NOT TAKEN FOR CASH HOLDING

 Fact:

While checking branch accounts we found that no insurance policy was taken by the Branch covering the risk for holding cash on counter and cash in transit.

Implication/Risk

It may enhance the risk of holding cash at branch level.

Recommendation:

Bank should ensure that adequate insurance coverage for cash at branch level is taken.

 FINDINGS # 18

 ACCOUNT OPENING PROCEDURES

Fact:

While checking branch accounts we found that the account opening procedures with regard to current and savings deposits were not followed properly. Instances are given below:

  1.                               i.      Photograph & Certificate have not been found;
  2.                              ii.      Account has been opened without initial deposits;
  3.                            iii.      Tax certificate not found;
  4.                            iv.      Nominee Photograph has not been found;
  5.                             v.      Photograph & Certificate have not been found;
  6.                            vi.      KYC form was not signed / found;
  7.                          vii.      Nationality Certificate was not found.

Implication/ Risk

  1. It indicates non-compliance with the policy of the Bank regarding account opening procedures;
  2. It may encourage money laundering activities; and
  3. Account holders identification can not be ensured.

Recommendation:

The bank should take proper initiatives to complete the documentation.

 FINDINGS # 19

 PAY ORDERS AND PAY SLIPS BALANCE REMAINED UNADJUSTED

 Fact:

While checking branch accounts we found that pay orders & pay slips balance in the branch offices of the bank remained unadjusted for a long period of time.

Recommendation:

We suggest that the management should review the status of the unadjusted balances in each month and take necessary steps to settle the issue. Besides this, Head Office should introduce necessary policy & procedure requiring the Branches for its proper controlling, reporting to authority concerned and keeping records as evidence and reference.

FINDINGS # 20

HALF YEARLY BALANCE CONFIRMATION CERTIFICATE

 Fact:

As per BRPD Circular # 6/ 1998, 9/ 1998, 13/1999 and 4/2001 of Bangladesh Bank each branch of the bank is required to issue half yearly balance confirmation certificate to all current and savings depositors. But while checking this in branches we found that in most of the cases branch management did not send balance confirmation certificates to the savings and current deposit account holders. Some instances are given below:

Branch name

Type of accounts

No. of  Accounts

Certificate Issued

Ramna Corporate Branch

Current Account

955

123

Savings Account

5,338

207

Rupali Sadan Corporate Branch

Current Account

2,553

Nil

Savings Account

4,861

Nil

B.B Avenue Branch

Current Account

780

163

Savings Account

3,201

426

Foreign Exchange Branch

Current Account

2,390

Nil

Savings Account

4,138

Nil

 Implication/Risk

It indicates non-compliance with the Bangladesh Bank circulars.

 Recommendation:

The bank should ensure that the relevant circulars of Bangladesh Bank are complied by each branch.

FINDINGS # 21

MONEY-LAUNDERING ACTIVITIES

Fact:

In some cases, there was no proper system of maintaining separate files for various anti-money laundering related activities and communications.

Implication/Risk

This may result in happening of unwarranted incidence regarding money laundering which may damage reputation of the bank.

Recommendation

The bank management should take proper steps in this regard.

 FINDING # 22

 LOAN SANCTIONING, DOCUMENTATION, DISBURSEMENT AND UTILIZATION PROCEDURES

 Fact:

 We observed some irregularities in sixty selected branches in respect of loan sanctioning, documentation, disbursement and utilization procedures. Instances are given below:

  1. Insurance policy for natural disaster was not available;
  2. Audited financial statements of the borrowers were not found;
  3. Updated trade license of the borrowers were not available;
  4. Monthly inspection report was not found;
  5. Latest CIB report was not available;
  6. In some cases revenue stamp was not affixed on promissory note;
  7. Updated tax clearance certificates of the borrowers were not obtained,
  8. Credit Risk Grading Score was not available;
  9. Third party  valuation report for security mortgage was not available;
  10. Updated land development tax receipt was not available;
  11. TIN certificate was not found;
  12. Updated land development tax receipt no found;
  13. VAT registration certificate was not found;
  14. Letter of guarantee was not found;
  15. “Letter of Disclaimer” not obtained from land lord of godown;
  16. Original deed was not obtained;
  17. Net worth statement was not found;
  18. Stock valuation report was not found; and
  19. Charged documents were not filled up properly.

 Implication/Risk

It may create risk in the recovery of given loans and advances.

Recommendation:

The branch management should be vigilant about the aforesaid matters before sanction, documentation, disbursement and utilization of loans and advances in order to ensure that the outstanding amount can be fully recovered in due course of time.

 FINDING # 23

CLASSIFICATION OF LOANS AND ADVANCES AT BRANCH LEVEL

 Fact:

In some cases to classify loans and advances the branches did not fully follow the related BRPD Circular No. 05 dated 05 June 2006.

Recommendation:

The branch management should classify the loans and advances as per BRPD Circular No. 05 dated 05 June 2006.

FINDING # 24

ACCOUNTS BALANCE FALL BELOW THE PRESCRIBED LIMIT

Fact:

We observed that in some cases the accounts balance came down the prescribed limit i.e. below Tk.500 and Tk. 1,000 for saving deposit and current deposit respectively. Some examples are given below:

Name of Branches

Accounts Holder

Account No.

Account Type

Minimum deposit to be kept

Account Balance

Gulshan Br. Dhaka.

 Implication/Risk

i. It indicates non-compliance with the circular issued by the bank; and

ii. It indicates weakness in internal control system.

Recommendation:

The branch management should take initiative so that account balances do not fall below the prescribed limit and the accounts showing nil balance should be closed.

FINDING #  25

 STATIONERY MANAGEMENT PROCEDURE

Fact:

We observed the following irregularities regarding stationery management:

  1. Physical verification of stock of stationery was not conducted by the Branch Management; and
  2. Stationery register was not updated regularly.

Implication/Risk

  1. It indicates non-compliance with policy of the Bank regarding stationery management; and
  2. It may enhance scope of misuse of stationery items.

Recommendation:

The branch management should take initiatives to enhance control over stationery management.

FINDING # 26

ABOVE 10 YEARS INOPERATIVE ACCOUNT BALANCE NOT TRANSFERRED TO BANGLADESH BANK

 Fact:

In course of our audit period we observed that there were many inoperative account balances above 10 year but not transferred to Bangladesh Bank. . Some examples are given below:

Name of Branch

Account Holders Name

Account No.

Last Transaction Date

Amount in Tk.

Purana Paltan Br. Dhaka.

Savings

100001355

01.07.2000

690.00

Savings

100001552

01.07.2000

27.75

Savings

100001896

01.07.2000

1300.00

Savings

100002698

01.07.2000

19.06

Savings

100003823

01.07.2000

27.00

Savings

100005051

01.07.2000

38.50

Savings

100010069

01.07.2000

33.19

Savings

100011292

01.07.2000

1869.00

Savings

100011524

01.07.2000

43.99

Savings

100011716

01.07.2000

1285.75

Savings

100013166

01.07.2000

32.71

Savings

100013342

01.07.2000

39.25

Savings

100014157

01.07.2000

909.00

Savings

100014655

01.07.2000

47.88

Bhairabbazar Br. Mymensingh.

Savings

61

4464.00

Savings

116

3449.00

Savings

182

1942.00

Savings

263

1714.00

Savings

335

1231.00

Savings

474

5508.00

Savings

517

968.00

Savings

526

1238.00

Savings

577

2744.00

 Recommendation:

Steps should be taken to transfer above 10 years account balances to Bangladesh Bank.

 FINDIND # 27

DEPRECIATION CHARGE ON FIXED ASSETS

 Fact:

During the period under audit we observed that some branches were not properly charge depreciation on fixed assets.

 Implication / Risk

  1. It indicates non-compliance with the circular issued by Rupali Bank Limited;
  1. It indicates non-compliance with the depreciation policy of the bank;
  1. It may overstate/understate in the financial statements of the Rupali Bank Ltd;

Recommendation:

Necessary steps should be taken to comply with the depreciation policy of Rupali Bank Limited.

FINDIND # 28

TRANSFER POLICY

Fact:

During the period under audit we observed, in some branches employees are being working for more than three years. Some examples are given below:

Name of Branch

Name of Staff

Designation

Joining Date

Duration as on 31.12.09

Ramna Corporate Br.Md. S. M. Abu BakarPrincipal Officer

12.04.1999

Over 11 Years

Md. Sagir Ahmed MunsiPrincipal Officer

28.05.2005

Over 5 Years

Md. KamruzzamanSenior Officer

10.04.2006

Over 4 Years

Abdul Mannan MiahOfficer

20.11.1983

Over 27 Years

Elephant Road BranchMariful IslamPrincipal Officer

05.01.2006

Over 5 Years

Md. Azharul HaqueOffice Assistant

15.08.1998

Over 12 Years

Foreign Exchange Corporate BranchMd. Shahab UddinSenior Principal Officer

05.08.2004

Over 6 Years

Md. Ali HossainPrincipal Officer

14.11.2005

Over 5 Years

Prokrity RanjanPrincipal Officer

21.04.2006

Over 4Years

Md. Asgar HossainSenior Officer

26.06.2001

Over 9 Years

Implication / Risk

  1. It indicates non-compliance with the circular issued by Rupali Bank Limited.
  1. Employees might feel monotony to work in same place for years together;
  1. Employees of the bank are being deprived of getting adequate training and experience of different work; and
  1. Control over employees may be hampered.

Recommendation:

The bank management should strictly follow transfer policy in order to ensure proper utilization of employees and to have a well trained up workforce.

 FINDINGS# 29

 Loans remaining as Bad/Loss over 5 years but not written off.

 Fact:

Name of Branches

Loan Account No.

Name of Borrower

Outstanding Balance on 31.12.2010

Type of Loan

Account

Open Date.

Expire

Date.

Period of Arrear in Years.

Joydebpur Branch, Gazipur500000039M/s. Kafil Traders38934.00CC(Hypo)12.10.198830.04.198921Years and 8 Months.
500001092M/s. Jabeda Cosmetics10505.00CC(Hypo)30.04.200302.10.20037 Years and 2 Months.
500000109M/s. Nazma  Cloth Store453821.50CC(Hypo)03.11.199130.05.199218 Years and 7 Months.
500000865M/s, New Kalam Bostraloy & Germents.671945.00CC(Hypo)16.01.199715.01.199812 Years and 11 Months.
450006395Osini Kumar Shaha.75696.00Overdraft21.09.198321.03.198426Years and 9 Months
450014643Nukul Chandra Gupon.28681.00Overdraft24.08.198923.02.199020 Years and 10 Months
450020746M/s. AFM Najim Uddin.513337.00Overdraft09.04.199709.04.199713 Years and 8 Months

 

 

 

 

 

 

 

 

Bangshal Branch, Dhaka500000064M/s. Motiur Rahman1,149,455.08CC (Hypo)

12.11.20037 Years &

 

1 MonthBhairab Bazar Branch, Mymensingh.

460000157M/s Sourav General Store32839Overdraft27/01/198727/07/198723 Years and 5 months460000175M/s Hajee Kashem Ali Miah8927Overdraft01/12/196931/05/197040 Years and 7 months

We observed that in following loan and advances were classified as bad for more than five (5) years but not written off as required by BRPD circular # 02 dated 14 January 2006. Details are  given below:

Name of Branches

Loan Account No.

Name of Borrower

Outstanding Balance on 31.12.2010

Type of Loan

Account

Open Date.

Expire

Date.

Period of Arrear in Years.

 

 

 

 

TCB Bhaban Branch, Dhaka.500000218AX-TRADE1395736.00Cash Credit(Hypo)03.05.200110.12.20037 Years.500000268M.N Corporation.6577034.00Cash Credit(Hypo)19.10.200219.02.20046 Years and 11 Months.500000278M/S Urmi Traders.1394388.62Cash Credit(Hypo)13.03.200305.09.20046 Years and

3 Months.500000298Chorus Fashions Ltd.1180050.00Cash Credit(Hypo)20.03.200415.03.20055 Years and

9 Months.450000041Saiful Ahmed444982.00Overdraft12.09.199601.10.200010Years and 2 Months450000053M/S Rafi Engineering.521162.00Overdraft25.09.199401.10.200010Years and 2 Months450000095Benajir Ahmed3539505.78Overdraft12.09.199701.10.200010 Years and 2 Months450000105Sharif Hossain963359.50Overdraft10.09.199701.10.200010 Years and 2 Months450000176Md. Nazrul Islam401458.40Overdraft07.12.199701.10.200010 Years and 2 Months450000207M/S Rocks & Rocks.60454.00Overdraft30.12.199901.03.20019Years and

9 Months

Name of Branches

Loan Account No.

Name of Borrower

Outstanding Balance on 31.12.2010

Type of Loan

Account

Open Date.

Expire

Date.

Period of Arrear in Years.

Choto Bazar Branch, Mymensingh450031219Md. Bazlur Rahman29481.93

OD

04.11.197730.12.197832 Years.
450048447M/s. Anila Traders37916.00

OD

29.04.198129.06.198229 Years and 6 Months.
500000048M/s. Bina Pani Book Depo124427.00

CC (Hypo)

19.12.198419.06.198526 Years and

 

 

 

 

6 Months.

Kustia Branch, Kustia.490000014M/s Mohini Mills Ltd.297415.00C C ( Pledge)01.01.199501.01.199615 Years and 2 Months.500014553M/s Gulam Mostafa563261.70C C ( Hypo)21.09.199721.09.199812 Years and 5 Months.500015755M/s Afjal Hossain150000.00C C ( Hypo)19.11.200319.12.20046 Years and

2 Months.500022258M/s Jesa Enterprise171714.00C C ( Hypo)08.02.200308.08.20037 Years and

6 Months.500023991M/s Abhijat Garments81721.00C C ( Hypo)03.08.200403.08.20055 Years and 6 Months

Tangail Branch, Tangail.

450018712M/s Hasan Store8394.00Overdraft21/08/199021/08/199121 Years and 4 month450022971Mr. Gour Chandra Bosak5120.00Overdraft27/10/199327/10/199418 Years and 4 month

Name of Branches

Loan Account No.

Name of Borrower

Outstanding Balance on 31.12.2010

Type of Loan

Account

Open Date.

Expire

Date.

Period of Arrear in Years.

 

 

 

Thana Road Branch, Bogra.680000016Dr.Nani Gopal Ghosh113,892Project Loan19.02.198619.02.198723Years and 9 Months.680000023M/s Shishir Shilpa817,740Project Loan04.09.198604.11.198723Years.450000669M/s Hafiz & Brothers52,365Overdraft02.10.198302.04.198624Years and 7 Months.450000087M/s Taj Brothers204,097.45Overdraft20.05.198320.11.198525 Years.450000358M/s Monira Enterprise424,717Overdraft21.05.198721.11.198723 Years.490000144M/s New Music Cornar1,188,565C C (Pledge)11.06.198805.12.198822 Years.500000258M/s Sakawat Hossain1,358,288C C (Hypo)14.12.198715.06.198822Years and 5 Months500000534M/s R Q Chemical Industries2,436,666C C (Hypo)23.02.200323.02.20046 Years and 9 Months500000573M/s S R Bricks Manufacturing Co.1,311,273C C (Hypo)27.12.198730.06.198822 Years and 5Months

Market Branch,

Moulvibazar.

700000011Kazi Kashem10759.00Rural Credit03.11.200203.11.20037 Years & 1 Month.700000023Konok Lal Dhar3922.00Rural Credit19.02.200219.08.20037 Years & 4 Months.700000036Anukul Dhar4812.00Rural Credit19.02.200219.08.20037 Years & 4 Months.700000048Chan Moni Dhar5628.00Rural Credit19.02.200219.08.20037 Years & 4 Months.700000052Orbindo Datto(2002/05)5192.00Rural Credit19.02.200219.08.20037 Years & 4 Months.700000062Erash Lal Deb(2001/7)3584.00Rural Credit26.08.200126.02.20037 Years & 10 Months.700000073Md. Hannan Miah(2001/9)5337.00Rural Credit26.08.200126.02.20037 Years & 10 Months.

Recommendation:

Management should take necessary steps to write off the lying Bad/ Loss for more than five (5) years as per the instructions of BRPD circular.

 FINDINGS#30

Cash payment through invalid cheques :

 Fact:

We found that in some cases the Branch has made some payments of cheques which lost their valid period. Some instances are given below.

Name of Branches

Account Type.

Account No.

Cheque Date.

Cheque No.

Payment Date.

Amount in Tk.

Joydebpur Branch.

Current

1787

03.01.2009

0597169

04.01.2010

15,258

Current

CC-17

23.08.2001

CC-17

23.08.2010

4,000

Paltan Branch.

Savings

2084422

22.07.2009

4359548

11.01.2010

40,000

Savings

100070955

21.07.2008

4678965

26.07.2010

12,400

Faridpur Branch, Faridpur.

 Recommendation:

We strongly recommend that the Branch Management should be very careful so that these types of mistakes never recur.

FINDINGS#31

Cash payment through advanced dated cheques :

 Fact:

It also came to our attention that in some cases the Branch made some payments against advanced dated cheque. Some instances are given below.

Name of Branches

Account Type.

Account No.

Cheque Date.

Cheque No.

Payment Date.

Amount in Tk.

G L Roy Road.

Savings

1197204.12.2010117791004.01.2010

65,000

Savings

1314705.12.2010117974405.01.2010

1,200

 

 

Joydebpur Branch.

 

Recommendation :

We strongly recommend that the Branch Management should be very particular in payment of cheque. So that these type of irregularities may not recur in future.

 FINDINGS # 32

Different dates were found on a single cheque :

 Fact :

From our verification, we noticed that cash payment was made through cheque which contained two different dates having no initial. Detail is given below:

Name of BranchesAccount TypeCheque No.Cheque DateAmount in Tk.

Purana Paltan Br. Dhaka

Savings

4712281

11.01.2010

&

12.01.2010

20,000

 

 

 Recommendation :

We strongly recommend that the Branch Management should be careful so that these types of mistakes never recur.

FINDINGS # 33

Cash Payment by overwriting cheque:

Fact :

From our observation we found that following cash payments were made through  chaques which contained overwriting.

Name of BranchesAccount TypeAccount No.Cheque No.Cheque DateAmount in Tk.
Purana Paltan Br.Savings100078707988183311.01.10

Recommendation:

We suggest that the Branch Management should stop payment through this type of cheques in future.

 FINDINGS # 34

 Cash payment against defective cheques:

Fact :

 During our audit we notified that in some cases the Branch made some payments through cheques which were not written in proper manner. Some instances are given below.

Name of Branches

Account Type.

Account No.

Cheque No.

Cheque Date.

Payment Date.

Amount in Tk.

Mirabazar Br. Sylhet.

Savings

2055447

1872934

05.01.0010

05.01.10

5,000

Savings

2060342

3192687

05.01.0010

05.01.10

20,000

Savings

2039587

1872277

03.01.200010

03.01.10

10,000

Current

10236

0300149

11.1.0010

11.01.10

20,000

Faridpur Br.

Savings

100051542

4532176

3.1.210

03.01.2010

1,000

Savings

100083431

4532895

21.0100

21.01.2010

2,000

Bhairab Bazar Br.Savings643207/01/010399099207/01/20101,00,000
Savings497124/01/010399087424/01/201010,000
Current616224/01/0010399088324/01/20101,000

Recommendation:

We strongly recommend that the Branch Management should be very particular in payment of cheque. So that these type of irregularities may not recur in future.

FINDINGS # 35

Outstanding pay order Balance:

Fact :

During our audit we observe a difference between the cumulative balance of individual ledger and balance shown in statement of affairs in respect of outstanding Pay orders. Details are shown below:

Name of Branches

Particulars

Taka

Purana Paltan Br.Balance as per statement of affairs

Difference Amount

1,050.00Madaripur Br. Faridpur.Balance as per statement of affairs

2392340.00Balance as per ledger

5634797.00

Difference Amount

   3242457.00

G L Roy Road Br. Rangpur.Balance as per ledger

1049076.31

Balance as per statement of affairs

910096.01

Difference Amount

138980.30

Recommendation:

The Management should take immediate steps to reconcile the Balance of Pay Order and rectify the accounts accordingly.

 FINDINGS # 36

Outstanding Demand Draft Balance:

Fact :

During our audit, we observed a difference between the cumulative balance of Individual Ledger and balance shown in statement of affairs of Demand Draft. That is the balance of Demand Draft as per statement of affairs has been overstated.

Some instances are given below.

Name of Branches

Particulars

Taka

Madaripur Br. Faridpur.Balance as per statement of affairs

710700.00

Balance as per ledger

220454.81

Difference Amount

   490245.19

G L Roy Road Br. Rangpur.Balance as per ledger

9694447.30

Balance as per statement of affairs

5853604.20

Difference Amount

3840843.31

S K Road Br. Narayangonj.Balance as per ledger

692155.00

Balance as per statement of affairs

793624.00

Difference Amount

101469.00

 Recommendation:

The Management should take proper steps to reconcile the balance of the Demand Draft and rectify the accounts accordingly.

 FINDINGS # 37

Balance of overdraft

Fact :

During our audit, we observed a difference between the cumulative balance of Individual Ledger and balance shown in statement of affairs of Overdraft. That is the balance as per statement of affairs has been overstated.

Some instances are given below.

Name of Branches

Particulars

Taka

Yousuf Market Br.Balance as per ledger

4970.00

Balance as per statement of affairs

64970.00

Difference Amount

   60000.00

Kustia Br. KustiaBalance as per ledger

5718678.00

Balance as per statement of affairs

5374070.00

Difference Amount

   344608.00

Recommendation:

The Management should take immediate steps to reconcile the balance on the Overdraft and rectified the accounts accordingly.

 FINDINGS # 38

Balance of Loan

Fact :

During our audit, we observed a difference between the cumulative balance of Individual Ledger and balance shown in statement of affairs of Loans. That is the balance as per statement of affairs has been understated. Some instances are given below.

Name of Branches

Particulars

Taka

Yousuf Market Br. DhakaBalance as per ledger

15508509.92

Balance as per statement of affairs

15448509.92

Difference Amount

   60000.00

Chotobazar Br. Mymensingh.Balance as per statement of affairs

34,105,588.31

Balance as per Ledger

32,971,186.35

Difference Amount

   1,134,401.96

 Recommendation:

The Management should take immediate steps to reconcile the balance of the Loans and rectified the accounts accordingly.

FINDINGS # 39

Rupali Deposit Pension Scheme Two (RDPS-2)

Fact :

During our audit, we observed a difference between the cumulative balance of Individual Ledger and balance shown in statement of affairs of Rupali Deposit Pension Scheme-2 (RDPS-2).As per statement of affairs balance has been understated

Some instances are given below.

Name of Branches

Particulars

Taka

TCB Bhaban Br. DhakaBalance as per ledger

285,949.00

Balance as per statement of affairs

275,482.00

Difference Amount

   10,467.00

Ramdia College Br. GopalgonjBalance as per ledger

5407181.00

Balance as per statement of affairs

5406681.00

Difference Amount

   500.00

 Recommendation:

The Management should take proper steps to reconcile the balance on the Rupali Deposit Pension Scheme-2 and rectified the accounts accordingly.

FINDINGS # 40

Statement of Non-existent Borrowers:

Fact :

During our audit, we found that a large number of loan sanctioned to various untraceable parties. Now those parties have no more existence. Some instances are given below. A list of non-existence parties are given below:

                                                                                                               Figure in Lac

Name of Branches.Name of BorrowersAccount TypeLoan Payment DateOutstanding Amount

Recommendation :

We recommend that Bank Management should take a step to realize this amount from the officers concern involved in sanctioning the Loans.

 FINDINGS # 41

Pay Orders remained unclaimed for10 years:

Fact :

Pay Orders remained unclaimed for10 years and above but not transferred to Bangladesh Bank as per Section 35(i) Banking Companies Act, 1991.

Some instances are given below.

Name of Branch

Date of Issue

Pay Order No.

Outstanding Balance

Bangshal Branch01.01.1978

000002

500.00

01.01.1978

000019

300.00

01.01.1978

32/310

100.00

24.01.2004

33/120

25.00

24.01.2004

33/44

100.00

Brahmanbaria Br. Comilla.14/04/1998

POB/01/30/1246

820

15/11/1998

POB/02/27/216

490

14/12/1998

POB/03/27/240

4000

24/10/1999

POB/04/28/259

150

Chotobazar Br. Mymensingh.19.12.1996

833941/25/77

1070

08.11.1997

278778/27/676

20

14.101998

037187/28/314

50

29.07.1999

036644/28/371

750

01.01.2000

036889/28/613

100

08.04.2000

037512/29/195

20

18.04.2000

037513/29/196

20

Faridpur Br. Faridpur

 Recommendation:

We recommend the branch to transfer the outstanding balance of pay order to Bangladesh Bank as per rule.

FINDINGS # 42

Demand draft remained unclaimed for10 years:

Fact:

Demand draft remained unclaimed for10 years and above but not transferred to Bangladesh Bank as per Section 35(i) Banking Companies Act, 1991.

 Some instances are given below:

Name of Branch

Date of Issue

Demand Draft No.

Outstanding Balance

Brahmanbaria Br. Comilla.08/08/1993

DDP/858131/22/30

600

26/10/1993

DDP/858442/22/37

600

11/12/1995

DDP/127582/24/31

1000

09/11/1998

DDP/566752/27/29

750

29/08/1999

DDP/138685/28/21

600

28/02/2000

DDP/301654/29/01

750

28/02/2000

DDP/301660/29/07

750

Chotobazar Br. Mymensingh.18.08.1996

394419/25/26

600

24.11.1996

353877/25/33

600

24.11.1996

353880/25/36

600

24.11.1996

353883/25/38

600

24.11.1996

353884/25/40

600

22.03.1997

141205/26/09

600

G L Roy Road Br. Rangpur01.01.1939

0625996/100

600

09.01.1985

919393/14/10

150

13.02.1989

747547/18/01

30

22.11.1989

949414/18/145

20

26.11.1989

949243/18/144

20

Joydebpur Br. Gazipur.12.02.1998

430501/27/02

100

25.05.1993

566919/22/29

2000

18.08.1996

352835/25/36

600

01.11.1999

2221114/28/01

31

18.05.1996

394690/25/01

35

06.06.1995

793385/24/01

35

06.06.1995

793386/24/02

35

24.08.1995

806533/24/01

35

Kustia Br. Kustia.02.04.1995

138564/24/41

650

22.10.1995

139948/24/50

5

15.07.1998

252160/27/29

100

15.07.1998

252161/27/30

200

15.07.1998

252162/37/31

100

16.07.1998

252171/27/32

100

Pabna Br. Pabna.22.03.1999

472201/27/01

2250

22.03.1999

472202/27/02

500

27.07.1999

332478/28/36

50

06.07.1998

264997/27/26

50

12.11.1999

331550/27/37

15

01.12.1998

331605/27/43

15

22.04.1999

335327/28/01

50

18.10.2000

463457/29/13

50

Name of Branch

Date of Issue

Demand Draft No.

Outstanding Balance

TCB Bhaban Br. Dhaka0205.1999

496706/52

50

28.04.1999

597108/51

30

19.12.1996

003783/3

150

01.02.1997

061831/4

25000

15.11.1998

375045/32

1200

16.11.1998

375055/33

1200

21.05.1995

427361/2

150

06.12.1998

420987/39

150

 Recommendation:

 We recommend the branch to transfer the outstanding balance of Demand Draft amount to Bangladesh Bank as per rule.

Rupali Bank Limited

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