Audit flags Rs. 46.88 crore idle in MAHUD and MUDA accounts for years; Department says source unknown

A major financial irregularity has been flagged in the Directorate of Municipal Administration, Housing and Urban Development (MAHUD) and the Manipur Urban Development Agency (MUDA), where a total of Rs. 46.88 crore of government funds remained idle in departmental bank accounts for several years, according to the Audit Report on General, Social, Economic and Revenue Sectors for the year ended 31 March 2023.
The audit found that the Directorate of MAHUD retained Rs. 2.01 crore in the Drawing and Disbursing Officer’s (DDO) bank account as of November 2022, with the balance pertaining to the period prior to 2013. Similarly, MUDA retained a substantial cash balance of Rs. 44.87 crore as of March 2022, relating to the period before October 2014.
As per Rule 290 of the Central Treasury Rules, money should not be drawn from the treasury unless it is required for immediate disbursement. The rules also prohibit withdrawal of funds in anticipation of demand or to avoid lapse of budget grants. Further, Rule 230(7) of the General Financial Rules (GFR) 2017 stipulates that unspent balances should preferably not exceed three months’ requirement and funds should be released strictly based on actual needs.
The audit observed that both the DDOs had irregularly retained huge cash balances for a prolonged period, in violation of government orders dated 3 November 2006, which prohibit funds from being kept in bankers’ cheques, demand-at-call accounts or other unauthorised bank accounts by Drawing and Disbursing Officers.
The report stated that retention of such large balances indicates that the department had drawn money from the treasury without immediate requirement, thereby violating established financial rules and the principles of financial propriety. It also pointed out that the Directorate of MAHUD did not verify or conduct any cash analysis of the funds lying in the bank account.
In its response to the audit observation in February 2024, the department accepted the audit finding but stated that the source and specific purpose of the funds lying in the DDO account were not known.
The audit has recommended that the department should analyse the source and purpose of the funds and release them to the Urban Local Bodies (ULBs) for implementation of various schemes, including Solid Waste Management (SWM).
The findings raise concerns over financial management and treasury discipline, as public funds amounting to nearly Rs. 47 crore remained idle for several years outside the treasury system.