Vigilance and internal audit chief general manager DR Gangopadhyay, in an internal circular dated September 13 has said, ``Important and critical disbursement parameters were relaxed or ignored to the detriment of the interest of the corporation.''

The circular reinforces this point by stating that ``Delegated powers in the matter of disbursement as per existing systems and procedures were found to be violated.''

The head of vigilance is in favour of rotating critical portfolios amongst directors. He is reported to have suggested to the ministry that the credit department should be headed by rotation by different directors on the board to ensure that no vested interests set in.

The circular comes just before the company's annual general meeting scheduled for this week. Thecircular, which is a virtual admission of violations in the credit department, has caused a flutter within the organisation, as there are apprehensions that the institution's second-quarter results are not going to be bright.

Coinciding with the circular, three middle-level managers have been meted out severe punishment. One manager has had to face the ignominy of losing his last six increments. This treatment is being viewed as unfair within the institution. There is bitterness, as the managers are perceived to be innocent.

A senior manager, speaking to The Financial Express under condition of anonymity, said the managers were acting on instructions. He added that the Government, which has nominees on the board, cannot be completely oblivious of the internal working of the institution. ``The two Government nominees on the board are not there for mere decorative value. It is their business to keep a sharp eye on the functioning of the institution,'' he said. IFCI has two Government nominees, onefrom the banking division in the ministry of finance and the other from the ministry of industry.

After bemoaning the state of affairs within the institution, Gangopadhyay underscores his point about laxity in the credit department by pointing out that the check lists indicated in Paragraph 6.3 of the credit manual should be strictly followed before processing disbursements. The circular ends by stating: ``All necessary safeguards as prescribed for post-disbursement monitoring and follow-up of loan assets should be strictly adhered to, so that the quality of loan assets is constantly upgraded.''