CAG Audit Uncovers Systemic Failures in Goa's Economic Development Corporation
The Comptroller and Auditor General of India has delivered a scathing assessment of Goa's Economic Development Corporation. A comprehensive audit covering five years from 2018 to 2023 revealed serious deficiencies in how the corporation manages its loan portfolio. The findings point to systemic problems that require immediate corrective action.
Selective Treatment and Interest Rate Irregularities
The audit discovered troubling patterns in how EDC treated different borrowers. Some borrowers received preferential interest rate reductions without proper justification. The corporation charged lower interest rates than it should have due to deficiencies in loan appraisals and security assessments.
Even more concerning, the board of directors failed to review interest rates periodically as required. This oversight allowed irregularities to persist unchecked. The selective approach to interest rates created an uneven playing field for borrowers.
One Time Settlement Scheme Violations
The CAG report highlighted significant problems with how EDC implemented the One Time Settlement scheme. In cases involving mining-affected loan accounts, the corporation did not follow scheme conditions properly. This resulted in higher principal waivers being extended to certain defaulters.
The audit specifically recommended that EDC ensure strict adherence to OTS scheme conditions. The corporation must optimize recoveries on defaulted loans without showing favoritism to select defaulters.
Poor Recovery Efforts Despite Legal Advantages
Perhaps the most glaring failure identified by auditors involves EDC's recovery processes. The corporation showed inadequate follow-up action even when courts delivered favorable verdicts. In some instances, EDC failed to file court cases altogether, delaying resolution of defaults indefinitely.
The recovery process suffered further from inaccurate reporting of defaulter data to Credit Information Companies like CIBIL. This failure weakens the entire credit ecosystem and prevents proper risk assessment.
Lack of Strategic Direction and Planning
The CAG observed a critical absence of long-term corporate business planning at EDC. The corporation operates without a clear vision to drive business direction, resulting in continuous decline of its loan portfolio. This lack of strategic thinking undermines EDC's core mandate.
Despite accumulating annual profits of Rs 250 crore during the audit period, EDC retained these funds without any realistic deployment plan. The corporation failed to use these resources to further its primary mission of lending to MSMEs.
Key Recommendations for Reform
The CAG report makes several crucial recommendations for EDC's improvement:
- Formulate a comprehensive strategic business plan with clear vision and mission documents
- Establish proper systems for periodic review of interest rates
- Implement strict adherence to OTS scheme conditions without selective relaxation
- Strengthen recovery processes and follow-up on court verdicts
- Ensure accurate reporting to credit information companies
- Develop realistic plans for deploying accumulated profits toward MSME lending
The report has been tabled before Goa's legislators, who now face the task of ensuring these recommendations translate into meaningful reforms. The audit findings present both a challenge and an opportunity for EDC to rebuild its credibility and effectiveness as a development finance institution.
