West Bengal State Electricity Distribution Company Limited (WBSEDCL) had to make an avoidable payment of interest of Rs 1.79 crore on cash credit accounts for having retained funds in non-interest bearing current accounts and resorted to borrowings from cash credit accounts, according to a report of Comptroler and Auditor General (CAG) placed in the state Assembly this month. This occured owing to lack of fund management, it added.

The company maintains 19 curent acounts with various banks for making its operating expenditure, the report stated. Three of these current accounts were without anti-sweep facilitiy and the board of directors had approved availing of short term loans or cash credit facilities from banks for the purpose of meeting its operartional expenditure under acute exigencies.

During 2012-16, WBSEDCL retained accounts ranging from Rs 3.80 lakh to Rs 2, 169.62 lakh in three non-interest bearing curent accounts with Axis Bank, ICICI Bank and Indian Overseas Bank as idle funds. The periods of deposit ranged between one day and 18 days, the CAG report stated.

During the same period, WBSEDCL had availed cash-credit facilities ranging from Rs 6,259 to Rs 247.71 lakh with interest rates of 11.50 per cent for making various payments, the report stated. These payments were in compliance with the board’s decisions to draw cash credit after due consideration of exigencies, it was pointed out.

The idle funds lying in these non-interest bearing current acounts could have been depoited in the cash credit accounts from where the payments were disbursed. Thereby, payment olf Rs 1.79 core towards intererst on such cash credit accounts could have been avoided, the report stated.

The power utility company’s management, according to the CAG report stated that WBSEDCL had to open its curent accounts with a purpose, while cash credit accouts were opened to redress liquidity crunch.

Therefore, current acounts and cash credit accounts were opened simultaneously. it was stated.Payments were made to small vendors, power utilities, the state government and other instititutions, according to WBSEDCL. It was practically not possible to match the receipts with the disbursement of funds, the power utility firm stated.

WBSEDCL had not monitored the availability of funds in non-interest bearing accounts while resorting to borrowiings from cash credit accounts to meet payments, the CAG report pointed out.

Moreover, WBSEDCL’s audit committee had observed in August, 2014 that significant balances were maintained by the company in current accounts, whereas substantial interest was paid on borowings from cash credit ; though the comittee had directed that all curent accounts be closed by August, 2014, it was not done.