J&K Bank headed for a major crisis, say reports


Srinagar, May 10: If the reports of a major local daily are to be believed, the J&K Bank is headed for a major crisis and the reason – Rise in Non-Performing Assets (NPAs), which may have touched a whopping Rs 4,000 crore.

The balance sheets for the year ending March 31 this year is still not out for public scrutiny and the report says that once made public, it’s going to be troubles for the bank as well as the state, as the government has 53.17% stakes in the premier financial institution.

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In 2014, the NPAs were Rs 783 crore which rose to Rs 2,764 crore in 2015 and the trend has not changed where the latest statement may expose record rise in “bad loans”.

It is being speculated that J&K Bank’s pushiness on lending of loans worth crores of rupees and failure to recover them is the biggest cause behind the rise in the NPAs.

Back in March 2014, the bank’s stocks had taken a dive of 13.93% translating at Rs 1,584 on BSE after a media report allegation that some of the directors and officers at the bank were not declaring all the non-performing and stressed assets in its loan book.

The news report further claims that the bank started declaring more and more NPAs on the loan book, but not all of the defaulters were made public.

The report alleges, “”Political patronage of successive regimes, which the bank top brass enjoyed from time to time has been the major reason of this sweeping under the carpet… Basically most of the loans were given on political patronage,” explained a bank insider, asking not to be named.”

The turnaround came this year when the state was under Governor’s rule and reports surfaced that liquor baron Vijay Mallya was a defaulter with the J&K Bank.

The source in the report also claims that a single business house owed Rs 70 crore to the bank and had not paid a penny for around two years while it was yet to be declared NPA.

The financial statement is being audited by the Comptroller and Auditor General of India and the report claims that the gross total NPA was pegged to touch Rs 4000 crore mark.

On March 11 this year, Div Com Kashmir, Asgar Samoon said the J&K Bank, considered to be the state’s premier financial institution, lacked vision for investment and representatives from the business community and young entrepreneurs should be part of its policymaking body.

Though J&K Bank Chairman Mushtaq Ahmed could not be contacted for comment, the bank officials refuted the allegations over NPA. “Nothing can be said as of now, till the financial statement is released at the AGM scheduled for June… But NPA is not the issue. If you look at performance of the other banks in the country, our performance is much better,” the official told the local daily.