J&K Bank auditors raise red flags in FY23 accounts over employee stock transactions

The auditors responsible for reviewing Jammu and Kashmir Bank’s financial records for the fiscal year 2022-23 have given a qualified opinion and have expressed concerns about the bank’s employee stock purchase scheme (ESPS). Specifically, they discovered that the bank’s employees had taken out loans to purchase shares, which went against the Reserve Bank of India’s guidelines. The auditors observed that the bank’s employees utilised their general-purpose cash credit limit and personal loan accounts, transferring funds from those accounts to their savings bank accounts. From there, the funds were debited to purchase shares in the employee stock purchase scheme. Such use of credit facility is not in line with RBI directions. Furthermore, Jammu and Kashmir Bank’s auditors noted that the allocation of shares in the employee stock purchase scheme took place on March 21, but the employees’ accounts were debited for the payment on March 23. This action was found to violate the Companies Act of 2013.