Following the statements carried in a section of local and national media in connection with the Reserve Bank of India's (RBI) Supplementary Agreement under Section 21A of the Reserve Bank of India Act, 1934 with the Government of Jammu & Kashmir to carry on the general banking business of the Government of Jammu & Kashmir and to act as the sole agent for investment of Government's funds, the J&K Bank management would like to clarify the factual position in this regard.
J&K Bank is the banker to the government of Jammu and Kashmir since its inception and continues to be the same today. The general banking arrangements existing between the bank and the state government shall continue in future as well.
We would like to reiterate following facts: - - In terms of section 45 of the RBI Act, it is inter-alia provided that the Reserve Bank of India may appoint the national bank, State Bank or a corresponding new bank as its agent at all places or at any place in India for such purpose.
- The central government in terms of its notification dated 26th August 1972 directed that the Reserve Bank of India may inter alia appoint the Jammu and Kashmir Bank as its agent at any place within the state of J&K and subsequently initiated the process in Feb 1992 for appointing J&K Bank as its agent for transacting the general banking business of the central government including collection of taxes for and on behalf of central government. This banking arrangement in respect of central government businesses is in operation in the state.
- It must be mentioned that the J&K State Government continues to be the main stakeholder with 53% equity holding. The arrangement between the state government and the central government or between J&K Bank and RBI or the state government in no way dilutes the status of state government or J&K Bank. It must be added that J&K Bank has strong national presence and global recognition as 23% of its equity is held by Foreign Institutional Investors (FIIs)
- The revised banking arrangement entrusted by RBI to J&K Bank to manage the general banking business of the central government and the state government is in fact the continuation of the existing arrangement.
J&K Bank has recorded sustained growth in its operational spheres including the deposit mobilization, credit dispensation, profitability, NPA management, benchmark profitability, liquidity and other analytical ratios. The success stories have been from time to time conveyed to our esteemed stakeholders, customers and general public through various sources of communication.
The bank apart from managing banking business of state and central government, has the privilege of being bankers of the country's who is who in the corporate world both in the government and private sector. The bank has in its fold the major corporate giants in the country in the sectors of oil, infrastructure like roads, power etc, telecom, hospitality including major chain of 5-star hotels, housing, commercial real estate, industry etc.
J&K Bank has a very vast scope for business mobilization both in the state of J&K and outside and has been drawing strategies in this regard on an ongoing basis by introducing tailor-made products and services.
We have in the bank various financial products for promoting and protecting the production, sustenance and livelihood across all sectors of the economy. Further the latest launch of the Seed Capital Fund Scheme under the auspices of Sher-i-Kashmir Employment and Welfare Programme For Youth (SKEWPY) envisaging a massive employment generation in the state, is another hallmark of the commitment of J&K Bank towards economic empowerment of the state.
Given the speed in services of international standard, good quality appraisal practices in place and providing banking arrangement to the major corporates in the country, J&K Bank will achieve the targeted growth rate as per its business plans and strategies and will continue to perform better and better in the years ahead.
J&K Bank has efficient management of NPAs and the NPA coverage ratio of 95% as against the RBI's stipulated benchmark of 70%, is one among the best in the industry. The thrust on quality assets and efficient management shall continue to remain a focus area.
Meanwhile, as a direct consequence of the revision in the arrangement, all state departments, constituents of the state government shall necessarily have to maintain their official accounts with J&K Bank only. Through this arrangement RBI has, in a way, expanded the role of Bank in managing the banking business of the state government exclusively with the J&K bank and has entrusted the bank with more responsibility.
J&K Bank while carrying the general Banking business of the state shall continue to handle all kinds of receipts/payments of the state government, salary disbursements, pension to civil pensioners, social welfare payments, treasury payments etc. This is also in addition to responsibility entrusted upon the bank to manage general banking business of the central government at various places.
We wish to further inform our stakeholders and esteemed customers that the bank's stability and viability is well founded irrespective of any repayment of loan and advance – big or small, which is a routine and normal feature of the bank's functioning. With business portfolio of over Rs.66000 crore now and best banking practices in vogue in all its affairs, repayments of loans and adjustments of accounts is a normal and routine affair and does not cause any issue on viability and stability of the bank.
We would further state that the deposits and advances of the bank grew by 13 and 11 percent respectively in FY2009-10 and in all probability J&K Bank shall achieve a growth percentage close to 20 per cent in both segments in the current financial year. The bank is poised to record the growth in profitability in the same manner. This is despite the uncertain conditions faced by trade, industry and service sectors for the few months in the current financial year in the J&K State.