Jammu and Kashmir Bank Limited is only reputable financial institution in state. It acts as a universal bank of state. J&K Bank Ltd. was established on 1 October 1938 and commenced its business on 4 July 1939. It is first bank in India as state owned. The bank was constituted as a government company under Companies Act, 1956 and is functioning as bankers to the state government. It is an ‘old private’ bank and is supervised by Reserve Bank of India.
Day after the dissolution of J&K assembly, the state administrative council chaired by governor Satya Pal Malik decided to turn J&K Bank Ltd. into a public sector bank, snatching its autonomy and making it accountable to state legislature. In addition, it will be brought under the ambit of RTI act and the Central Vigilance Commission. Now J&K government had authority to nominate board of directors. The position of chairman had been reduced to extent of managing director of a public sector corporation. In short we can say individuality of the J&K Bank Ltd. had been snatched by governor.
Erosion of J&K’s special status is being made on multiple fronts. There is an uninterrupted attack on fiscal autonomy of the state. Imposition of GST earlier and now snatching individuality of J&K Bank Ltd. exposes the core agenda of New Delhi regarding state of J&K. Declaring J&K Bank Ltd. a Public Sector Undertaking (PSU) is a disaster. The SAC headed by Governor should have first considered negative impact of functioning of this prime institute before turning it a PSU. Most of the state run PSUs are not doing well. Every year they met loses worth crores. The state run PSUs are loss making institution for state, sucking major part of the budget of the state. Therefore, downgrading status of J&K Bank Ltd. to a PSU is a weird decision. Despite government’s efforts in past few years, most of the PSUs in state are in financial crunch, even unable to pay salaries. In 2011, the golden hand shake scheme was introduced as part of efforts to revive sick PSUs but nothing fruitful was achieved. PSUs like JKSRTC, JK Cement, etc show loses while crores. Yes, some PSUs like JK Handloom, SIDCO, etc brought down the loses almost by half while some others like Horticultural Produce Marketing and Processing Corporation (HPMC) showed medium range recovery. Previous alliance government also put efforts on restructuring these PSUs.
Government of J&K has been authorized to nominate members for board of directors for J&K Bank Ltd. and position of chairman had been reduced to the extent of a managing director of a PSU. The power of government has been increased; even government of state can even intervene in lending and buying of the bank. The chairman and MDs of the PSUs are chosen by government of state while chairman and chief executives of J&K Bank Ltd. are appointed by Reserve Bank of India (RBI) on recommendation of board of directors of bank, under Banking Regulation Act 1949. At least governor should have kept regard of the apex institute of country which has sole power to control banking in country.
What is Banking Regulation Act 19149? Enacted by Parliament on 10 March 1949, the Banking Regulation Act laid the foundations of banking in India. It gave RBI powers to license banks, regulate shareholding and voting rights, supervise board appointments and control over managements, regulates banking operations, lay down instructions for audits and liquidation, and impose penalties. Stability of banks has been RBI’s sole focus. In 1965, the Act was amended to include co-operative banks under its purview by adding the Section 56. Cooperative banks, which operate only in one state, are formed and run by the state government. But, RBI controls the licensing and regulates the business operations.
Governor is targeting reputed financial institute of J&K. his decision left all politicians, economists, and people of J&K in high and cry. SAC under the chairmanship of governor is hell bent on demolishing the image of J&K Bank Ltd. It can’t be overlooked, during the days of economic downfall, some of major Asian banks were falling, but it is individuality of J&K Bank Ltd. under the chairmanship of praise worthy Mr. Parvez Nengroo, whose farsightedness put trembling ship of J&K Bank Ltd. back on the track. Skeptical or politics on behest of BJP at center, I do not get why Mr. Governor a well operated financial institute of state public. He should immediately roll back his decision. At least, he should have kept regard of Banking Regulation Act 1949 and RBI.
A series of attacks on institutes of J&K is a part of well knit plan. Article 35A and 370 row, imposition of GST against the principles of constitution J&K, abrupt dissolution of assembly and rise of third front, all are moves against the special status enjoyed by the people of state of J&K. It is an initiative to curb remnants of the autonomy of the state, where saffronists aim at full integration of J&K with the Union of India. It is a two pronged attack on J&K: attack on fiscal and political autonomy. India failed to integrate J&K full with its union, first militarily and later judicially, now they are attacking our institutes to break down financial as well as administrative structure of state. In these circumstances, there is a greater responsibility on mainstream politicians to unite against mysterious evil plans of BJP.
Sheikh Nissar can be reached at sheikhnissar@Outlook.com
(The ideas expressed are authors own and had nothing to do with the institution he works for.)