KCCI opposes the decision of the State Administrative Council (SAC)

The Kashmir Chamber of Commerce and Industry opposes the decision of the State Administrative Council (SAC) to bring the J&K Bank Ltd under the purview of RTI, CVC and the Legislature for the following reasons:

The J&K Bank cannot be treated as any other Public Sector Undertaking as it is a public listed company and is also governed under Banking Laws. The decision is being seen as unwarranted interference in the functioning of the Bank.  It is because of the autonomy, Bank enjoyed since it’s inception, that it has attained present level and become an important component in the existing economic structure of the State. Reportedly more than 50,000 shareholders have stakes in the Bank. The Government is only one of the shareholders with only 59.3 % shareholding.  In the strict sense, it is not a department of the Government nor is owned by the Government. It is not even substantially financed by the Government. Instead, the Government receives heavy dividends from the Bank. The people of the State have a vested interest in the functioning of the Bank. More than 90% of our members are connected with the Bank in one form or the other.

Our State has seen so many Governor’s in last seventy years. The State has been brought under Governors rule eleven times. Not a single Governor tinkered with the functioning of the Bank. It is for the first time that Bank had to engage additionally 582 banking associates when they were not needed as per the requirements. Reportedly, not a single case was filed against the Bank questioning recruitments made by it. But for the intervention of the Executive Head, more people came to be engaged increasing the avoidable expenditure of the Bank. Engagement of our unemployed youth cannot be resolved by providing them services in the Bank. Reportedly, architects, graduates, post graduates and other professionals have been engaged for rendering banking services, when their services could have been better utilized in the concerned departments of the Government. It appears that failure of the Government to provide employment to our educated unemployed youth is sought to be shifted to a semi-private Bank. It further appears that since the Bank has done well because of the credibility and support it enjoys in the people as an institution, the decision was taken to bring down this institution to a level of PSU of the Government. Is the intention to cause failure of the Bank at the cost of our people who depend for their livelihood on the assistance rendered by the Bank?

The Bank has over a period of time become synonymous with the identity of the people of the State and occupies a special sentimental place in their hearts. They consider it to be their own bank. The people and the Government under the existing scenario are not on the same page. The people look upon the Bank for financial help. Since it is now a PSU, people needing help will have to follow cumbersome red tapism and seek clearances from bureaucracy and/or ministry. The CEO of the Bank is reduced to a Managing Director of the Company.

So far as the position of non-performing assets (NPA’s) is concerned there is evidence to show that the people in the State repay the loans they borrow from the Bank. It is only few persons holding political power who can be counted, amongst others, major defaulters. It will be difficult for the Bank to proceed against such defaulters because they are the one who have a say in the Government.

The KCC&I views the whole issue in the context of J&K Bank as an institution. Till date, if the Bank has done well as is evident from it’s records available in public domain, it’s management being efficient evident from the share value of the Bank in the Stock Market and above all people of the State, in particular members of the trade community, being satisfied, no reason much less a credible reason is seen in declaring the Bank, under sunset orders, as PSU, bringing it within RTI and CVC when such issues are pending before the High Courts.

As a consequence of these decisions, the image of the Bank has been tarnished which could be catastrophic for any financial institution, it’s shareholders and those doing business with it.

The KCC&I has been on record to express its concern at the losses to our economy being caused by the lack of accountability in the State owned Public Sector Undertakings. A conservative estimate shows the current liabilities of these PSU’s to be upwards of Rs.10,000 Crores. In addition, the locking up of resources in the shape of infrastructure, land, manpower and potential has a consolidated negative impact – primary and consequential – running into lakhs of crores. Audits have not been conducted since decades and mandatory Board Meetings are not being convened over years causing huge losses.

The KCC&I considers that the Bank’s status as it was on 22nd of November, 2018 should be restored. Should any improvement be required, it can be discussed with stakeholders.

There are no two opinions that the Bank needs to be run by professionals and in a manner which inspires investor confidence. The Government has, by it’s decision and subsequent explanation of it’s decision failed to convince the general public and the business community about it’s intentions.

Statement given by the spokesperson of the Government gives the impression that the decision was only aimed at promoting good governance and transparency in the functioning of the bank. Other statements have emanated from the Prime Minister’s Office. These statements betray the intentions of the decision-maker. These statements dissemble public minds. Real motives are writ large.

We therefore urge His Excellency The Governor of the State to withdraw the decisions taken on the 22nd of November, 2018 relating to J&K Bank.