United Bank of IndiaBSE -1.00 % either deliberately or intentionally hid bad loans as its automated system to detect payment defaults was non-functional for more than two years, an audit by consultants Deloitte has found. The bank which has the highest bad loans among state-run lenders was downgraded by rating company ICRA, a unit of Moody's Services."The automated system that detects NPAs was found switched off,'' said a person familiar with the findings." 

Whether it was intentional, or by mistake remains a big question," said the person who did not want to be identified. ET NOW reported the story first on Thursday. 

The Reserve Bank of India had appointed Deloitte to conduct a forensic audit on the bank after a sudden jump in the bad loans in the September quarter. Its condition has since worsened with bad loans jumping to 10.9%, the highest in the industry, and forcing it to nearly freeze its core lending activities. 

"It will be difficult to probe whether it has been done deliberate or not," said the person. Deloitte said it would not comment on client proprietary matters and UBI chairperson Archana Bhargava could not be reached.