The matter was decided by the State Administrative Council (SAC), under the chairmanship of overnor Satya Pal Malik, who had proposed to run the bank as a public sector undertaking and brought under the scanner of RTI
Jammu: In a bid to keep a tab on the anti-national activities and ensure transparency while dealing with public money, J&K Bank has been brought under the purview of the Right to Information (RTI) Act, Chief Vigilance Commission (CVC) guidelines and the state legislature.
The State Administrative Council (SAC), which met here Thursday under the chairmanship of overnor Satya Pal Malik, approved the proposal for treating the J&K Bank Limited as a public sector undertaking and should be under the scanner of RTI.
Governor Malik had said the bank’s position, until now, as a private or public institution was decided “as per convenience, and by bringing it under the ambit of RTI and CVC will help bring greater transparency to its functioning”.
Supporting the step, the state BJP unit said it would help safeguard public money. “Bringing J&K Bank under the purview of RTI by the state government is a welcome step. It will go a long way in ensuring transparency in dealing with public money by the premium banking company of the state,” said BJP state chief spokesperson Sunil Sethi.
He said that there are lakhs of people in the state who have their money and investments in the bank without even knowing the investments by bank or the list and number of defaulters.
How are PSUs different from private sector banks
The bank, until now, was classified as an “old private sector bank” and supervised by the RBI, while also being subject to oversight by the Comptroller and Auditor General (CAG).
The Jammu and Kashmir government, with its 59% stake, has always been a majority shareholder in the J&K bank. And therefore, the move cannot be challenged. Other stakeholders are industrial investors with 24.73% shares, of which 16.17% shares are held by foreign investors.
Mutual funds hold about 5.36% and Life Insurance Corp owns 2.76%.
As a public sector bank, the bank will now be directed by the state government, which will also have a role in appointing chairmen and other directors.
Experts feel the bank, which was outside the ambit of the Central Vigilance Commission (CVC) and Right to Information, will now be brought under their wings. This will boost transparency and trust among its customers.
Besides, the government will also be in a position, which in any case is a majority shareholder, to take decisions on the bank’s financial health and also in the interest of the people.
J&K Bank is plagued with bad loans (gross non-performing assets) worth Rs 175.38 crore, amounting to 11% of all the gross advance.
This March, the gross NPAs of all banks (public and private) crossed Rs 10 lakh crore. Bad loans are those that the loan-taker is unable to return in the specified period.
The net profit of J&K Bank has been Rs 202.72 crore, as per the bank’s website, whereas accumulated net loans stood at Rs 3.63 crore in 2017-18.
The bank declared an annual profit of Rs 440.90 crore in the fiscal 2017-18.
The move was criticised by all regional parties of the state. Former Chief Minister Mehbooba Mufti had called the move a “disturbing step to snatch every bit of autonomy that our institutions have”.
The National Conference has demanded a rollback of the SAC decision.
On Tuesday BJP’s ally People’s Conference chief Sajad Lone had tweeted, “I register my unambiguous rejection of changes being made in the J and K bank. And it needs to [be] bereft of Govt control not drowned in Govt control. This is literally the sole lending institution and lending decisions should be commercial decisions outside the ambit of politics.”
Employees of the Jammu and Kashmir Bank on Thursday staged a protest here seeking rollback of the government's decision to treat the bank as a public sector undertaking (PSU). They protested at the corporate headquarters of the bank.
Reshuffle and transfers
The decision to bring J&K Bank under RTI act has rattled the hierarchy in the bank. A day after SAC’s decision, the bank authorities ordered a massive reshuffle of around 25 top officials, sources said.
(with PTI inputs)
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Last Updated 29, Nov 2018, 3:39 PM