Bank appreciates govt’s ‘timely support’
Srinagar: The Jammu and Kashmir government would infuse Rs 532 crores capital into the J&K Bank, which it said was facing Non-performing assets (NPAs) of Rs 6000 crores.
Finance Minister Dr Haseeb Drabu made this announcement in his budget speech in the Legislative Assembly on Wednesday.
Drabu, a former chairman of the J&K Bank, said that he was “deeply pained that our premier institution has been suffering some serious lapses in corporate governance and management failures” over the last few years.
The Finance Minister said that to help the J&K Bank on its road to recovery, as a promoter, the government will be making an equity infusion of Rs 532 crore in two tranches with a hope that the bank will go back to its profit-making ways in the first or second quarter of the next financial year.
This amount of Rs 532 crores as additional capital infusion will come in two tranches during next financial year to retain J&K government’s strategic equity share of 53.17 percent in J&K Bank which was struggling to maintain its capital adequacy due to huge bad loans, short provisioning undertaken during previous periods, provisioning costs owing to restructuring of its portfolio affected due to recent unrest in the Valley and meeting fresh capital requirements as per mandatory guidelines.
Meanwhile, thanking the government for its “timely support”, Chairman and CEO, J&K Bank, Parvez Ahmed while elaborating on the infusion explained that the bank was facing lot of challenges to meet various demands of capital on regulatory guidelines and growth plans with its existing capital position which was under tremendous pressure.
In a statement here, Ahmed while acknowledging the support of J&K government highlighted the key ownership role that the government has played from time to time in supporting the growth and expansion plans of the bank.
While expressing his confidence in government backing the bank in its “business and governance objectives” hoped that deep insight of Finance Minister into the governance and business architecture of the bank, being one of its previous Chairmen, shall come handy for revival of the J&K Bank’s glory which would have been very difficult in other situation.
Ahmed also asserted that “the road to success in J&K Bank’s journey of achieved excellence would not have been carved without the exemplary support from Government of Jammu and Kashmir.”
Highlighting the stance of the State government in securing the clearance of recent restructuring proposal from RBI, Ahmed echoed his deep satisfaction and gratitude towards the government and counted it among the fundamental and most vital strengths of the bank.
Making special mention of Chief Minister and Finance Minister’s “hand-holding of the bank in times of strife,” Ahmed in his thanks note assured that the reciprocation by way of decent dividends to all stakeholders, handsome return on equity in near times and sincere custody of the faith that the government has reposed in the bank shall be the hallmark of the commitment that “I hereby make” and assured that “under able guidance of finance minister and continuous support from government, bank shall soon reclaim its glory of prosperous past periods.”