State-owned Rural Electrification Corporation (REC) has appointed a consultant to review its business procedures and flag inadequacies and weaknesses therein, company chairman PV Ramesh said on Friday.
This comes after the national auditor pointed out some lacuna in due diligence process followed by REC for sanction and disbursal of loans to private power project developers.
REC has hired a senior consultant to review business procedures and identifies inadequacies, Ramesh said on the sidelines of a press conference held by the company to announce first quarter results.
Ramesh said REC takes CAG’s observations with utmost seriousness.
The Comptroller and Auditor General (CAG) has reviewed performance of both REC and Power Finance Corporation in a joint report, which was tabled in parliament on Thursday.
“REC and PFC did not conduct appropriate due diligence during credit appraisal and in the process assumed higher risks on the loan accounts,” the report said.
It noted that both the REC and the PFC deviated from their internal guidelines and also did not conform to the Reserve Bank of India guidelines in this regard.
It also said experience and ability of promoters to develop projects was not assessed objectively as it was done based on individual judgement.
However, REC on Friday wrote to the stock market watchdog to clarify that the company has got appreciation from the national auditor for its compliance with RBI prudential norms in recognising non-performing assets (NPAs) and review of loan appraisal guidelines.