J&K Bank:Public asset at stake

Published at December 04, 2018 12:26 AM 0Comment(s)3891views


Zahid Rehman

The recent decision of the Governor led administration to treat J&K Bank as a public sector undertaking has raised many eyebrows among the common people as well as among the regional political parties cutting across the ideologies.

Before analysing such a move,it becomes pertinent to visit the history of the bank.

It was on October 1st 1938 that Jammu and Kashmir Bank was founded under letters patent issued by the Maharaja of Jammu and Kashmir.

The founding directors were the invitees by the Maharaja and on July 4th 1939 it commenced its banking business. J&K Bank is licensed as an old private sector bank and enjoys the reputation of being the only state owned bank in the country.The state government at present holds 59.3 percent of the banks stake.

As per the provisions of Indian companies Act,1956 J&K Bank was defined as a government company,after the central laws were extended to the state of Jammu and Kashmir.

J&K Bank has remained states premier financial institution operates under set guidelines from time to time by the bank regulator Reserve Bank of India(RBI) after the bank was previously declared as an A class bank by the RBI in 1976.

Trying to bring the bank under CVC,and placing its annual report before the state legislative assembly would tantamount to disregarding the robust regulatory mechanism, for RBI under moral suasion has the powers to penalize the scheduled commercial banksas has been seen in the past, RBI has not shied away from penalizing many banks for not ensuring compliance on various banking parameters.

When the regulatory mechanism is so robust and efficient it serves no purpose to bring in other unnecessary regulatory mechanisms.

J&K Bank as a financial institution has Board of Directors (BOD), who should be able to act without any political medalling or interference. The members of the BOD are of high repute and have immense financial know-how to take decisions in the best interests of the bank.The members are selected only after the prior approval of the RBI.

The profits although had nosedived in the year 2017 but the bank has rewritten its success story which can been seen in the figures of FY 2018-2019 so far.

All the players in the banking industry have been hit by the problem of NPAs and J&K Bank is a no exception to this pan-India financial phenomenon. Interestingly J&K Bank still feared better as compared to the other banks.

There are other ways to bring more reforms in terms of corporate governance,and to enhance the transparency,this can be easily achieved without diluting the autonomy of the bank.It would be like crippling the wings of a falcon which wants to venture newer and newer skies.

The manner in which the SAC decision was passed makes it even more suspicious about the intentions behind such a move.

As rightly stated by former chief minister Omar Abdullah that such decisions having far reaching consequences for such decisions ought to be taken by an elected government which enjoys the confidence of the electorate.

Also the fact that around 41 percent of the shareholders werenot taken into confidence before moving ahead with such a huge decision;what is even more worrying is that the board of directors of the bank were also not informed about such a move,let alone their opinion about the move.

This clandestine nature of the move raises concerns and apprehensions in everyone’s mind.Also since the inception of the bank,all these years no one wanted to fiddle with the status and autonomy of the bank,what has changed now that forced the Governor led administration to take such a decision.

When the world governments are moving towards more liberalization and privatisation, we cannot turn the clock back and have stringent and regressive control mechanisms.More liberalisation and privatization leads to more competition hence more efficiency.

The fact that none of the existing state PSUs are functioning smoothly and performing as per expectations coupled by the fact that their balance sheets have remained unaudited for several years,and have been reporting loses on a continuous bases should serve as an eye opener for proposers of such a move.

Fitting a company which is generating massive profits for the state into a mould of non-performers is beyond ones logic.It would have been apt if the loss making PSUs were made to follow the working procedure of the bank or even handed over to J&K Bank for their turnaround.

Till 2011 J&K Bank acted as the sole banker to the state government, after assuming the role to RBI,such a move also led to dilution of the special position of the J&K Bank;had such a move been opposed at that time by the political class in particular and common masses in general,we might not have faced the current situation today.

Right from its inception J&K Bank has been one of the leading and prominent institutions of the state. It acts as a financial backbone of the state.Be it providing employments,or giving back to the society under the banks CSR initiative or providing handholding to the business community in the most turbulent times, J&K Bank has always come out with positive and encouraging outcomes.

With more than 50 banks operating in the state,the fact that around 70 percent of the credit dispensation comes through the J&K Bank should be enough to highlight the quintessential and indispensable position the bank holds.

The bank has recently provided financial aid to the Kerala victims and to the fruit growers who had faced the damage due to early snowfall,which reflects the concern of the bank for the society.

J&K Bank is a social asset and for people of the state there is a massive emotional investment and emotional bonding with the bank,this is the reason why the decision of SAC is being opposed tooth and nail by one and all.

It becomes obligatory for all of us to protect the special status enjoyed by our premier financial institution.It would need concerted efforts from one and all including the political parties and common masses.

mirzahid336@gmail.com

 

 

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