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| J&K Bank unable to peg default, figure reaches Rs. 519 cr | | 'Commoners easy prey' | | Syed Junaid Hashmi
JAMMU, May 29: Habitual of harassing the commoners, Jammu and Kashmir Bank has huge list of rich and politically well-connected defaulters who owe the bank more than Rs. 519 crore.
The defaulter's account becomes a non-performing asset (NPA) for the bank and hence, J&K Bank has non-performing assets worth Rs. 519 crore. Of these, Rs. 312 crore is outstanding in the priority sector. This includes Rs. 47 crore advanced as loan for agricultural purposes, Rs. 49 crore which the bank gave to Micro and Small enterprises and Rs. 216 crore which it extended for other purposes under the priority sector.
In the non-priority sector, Bank advanced loans and then failed to recover more than Rs. 206 crore from the customers. Reserve Bank of India (RBI) in its "Report on Trends and Progress of Banking in India 2010-11" has brought out these spine chilling revelations. Report has attributed default of Rs. 519 crore to weak credit appraisal system, industrial problems, inefficiency in management of borrower, slackness in credit management and monitoring, lack of proper follow up, recession and other uncertainties.
Net NPA which is presently Rs. 519 crore in the case of J&K Bank is obtained by deducting items like interest due but not recovered, part payment received and kept in suspense account from Gross NPA. RBI has advised Jammu and Kashmir Bank along with other banks of the country to treat reduction of NPAs in the Indian banking sector as a national priority item to make the system stronger, resilient and geared to meet the challenges of globalization.
Not only NPAs, the report has pointed out that Jammu and Kashmir Bank has failed to meet its target of extending loans and advances to weaker sections which includes Schedule Castes and Schedule Tribes. Of the total loan amount of Rs. 10, 424 crore advanced under the priority sector, a meager amount of Rs. 2807 crore was advanced to the weaker sections. This amount is just 14 percent of the total loan amount advanced by the bank under various sectors.
Bank also neglected agriculture sector and gave loans amounting to Rs. 2897 crore, which is 12.5 percent of the total lending in the priority sector. And as per the RBI report, Jammu and Kashmir Bank miserably failed to achieve targets it had fixed under the agriculture sector for the year 2010-11.
Besides, Bank's major shareholder is state government with 53.2 percent and this is followed by 23 percent non-residents holding the shares of Jammu and Kashmir Bank. State based corporate houses own 7.2 percent share in the bank. Jammu and Kashmir Bank, according to RBI report, has 503 branches which includes 231 in the rural areas and 362 ATMs of which 262 are on-site and 100 off-site.
RBI has further said that during the year 2010-11, it received 47 complaints against the Bank, which is slightly on higher side when compared with other private sector banks. RBI has recommended that the existing supervisory framework relating to NBFCs sector has to be enhanced to reflect the ongoing changes in perception of risk due to existence of regulatory arbitrage, rapid asset growth and interconnectedness with financial sector.
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