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Mixed Reaction to Governor’s Decision on Turning J&K Bank Into PSU

Sagrika Kissu |
While political parties of all hues see threat to autonomy, corruption remains a serious cause for concern
J&K Bank

Kicking up a controversy over autonomy, the State Administrative Council (SAC), under the chairmanship of Jammu and Kashmir Governor Satya Pal Malik, on November 22 took a decision to turn J&K Bank Limited into a public sector undertaking (PSU). The  bank will also be brought under the purview of the Right to Information (RTI) Act, the Chief Vigilance Commission (CVC) and State Legislature through the State Finance Department.

J&K Bank, an ‘old generation private sector’ bank, was established in 1938. Owned by the J&K government, it is a publicly listed entity functioning under the supervision of the Reserve Bank of India (RBI).

However, politicians across the spectrum have reacted sharply to the Governor’s decision. Calling it a “disturbing development”, Omar Abdullah of National Conference told The Indian Express, “caretaker administrator did not have the people’s mandate to take such major decisions with far-reaching implications.”

Meanwhile, Mehbooba Mufti of People’s Democratic Party was quoted by The Indian Express as calling it a “disturbing step to snatch every bit of autonomy that our institutions have.” Even People’s Conference leader Sajad Lone expressed his resentment over the governor’s decision by terming it “over-reaching government control.”

Apprehending a serious impact on the bank’s decision-making process, MY Khan, former Chairman of J&K Bank, told Newsclick, “PSU’s in the state are in bad shape and are mostly, in loss. Why is the Governor keen to turn it into a PSU. This will affect the decision-making process of the bank”.

Khan was also no in favour of bringing the bank under the purview of RTI.  “Banks can’t work like that… being under the surveillance of RTI. If there was some issue, they should have taken corrective measures. This decision can have a huge impact. The bank has been helping the people of the state. Almost 70% lending is done by the bank”, he said.

Meanwhile, J&K Bank is plagued with bad loans (gross non-performing assets) worth Rs 175.38 crore, amounting to 11% of all the gross advances, which is worryingly high. This March, the gross NPAs of all banks (public and private) crossed Rs 10 lakh crore. Bad loans are those that the loan-taker is unable to return in the specified period.

The net profit of J&K Bank has been Rs 202.72 crore, as per the bank’s website, whereas accumulated net loans stood at Rs 3.63 crore in 2017-18.

As for the shareholding, 56.45% of J&K Bank’s shares are owned by the Central and State governments. Industrial investors own 24.73% shares, of which 16.45% shares are held by foreign institutional investors.

While resentment over the Governor’s decision is palpable in the Valley in terms of compromising the bank’s autonomy, there is another side of the story.

According to some sources, the Governor’ decision is being seen as an attempt to disengage the bank from political influence and has come in the wake of backdoor entries and massive loans offered to defaulting big business houses.

Recently, the Governor had accused the previous PDP-BJP government of changing the entire list of 582 selected candidates for jobs in J&K Bank to appoint favourites. In their respective tenures, the National Conference and People’s Democratic Party have been equally accused of nepotism and favouritism.

Majid Hyderi, a senior journalist told Newsclick, “For last 30 years, J&K Bank has been a hell hole of corruption, favouritism and nepotism. Now some forces, including PDP, NC and many leading local media houses in Kashmir want a roll back so that the muck is not exposed.”

A valley resident, while requesting anonymity, said, “PDP, in its tenure, gave many backdoor entries to undeserving candidates. This ranges from their cousins, friends, relatives. Having said that, NC is equally complicit. During their tenure, they were equally corrupt. First, they give jobs to their favourites and then they talk about unemployment. How fair is that?”

Another person said, “At least under RTI supervision, the process of selection and hiring will be more transparent. For years, we have been listening to politicians getting their people into government jobs. I hope this decision will bring some change.”

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