J&K Bank chairman Mushtaq Ahmad on Wednesday said the bank is pursuing policies to improve the credit-deposit ratio (CDR) but expressed satisfaction over the credit growth. He also cleared air around the controversy around the interest rates and implementation of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (SARFAESI).
"The CDR is a matter of concern. However, CDR alone cannot lead to development. CDR is the efficient factor of measuring the bank processes but credit growth should also be considered," said Mushtaq during an interaction with the media.
The bank CDR stands at 61.4%. Union finance minister P Chidambaram, who spoke on the bank's platinum jubilee, had also stressed the need to improve CDR while praising the bank for maintaining net NPA at .14%. The bank has extended 86% loans in the state.
Clearing the air over the bank's interest applying practices, Mushtaq said, "Interest is not related to any industry, sector or geographical basis but is determined on the basis of risks involved in lending to a party."
He said the reason behind the interest rate being slightly on the lower side outside the state could be "the cut-throat competition".
"There is no excessive interest charges being levied in J&K or any practice of going soft on people outside...We have to compete with the best in the industry and the interest rate is determined by the market," said Mushtaq.
The banks net yield outside is 12.01%, while yield inside the state is 12.34%. The bank is buoyed over by earning profit of `1 lakh crore for 2012-13.
ON KINGFISHER LOANS
The J&K Bank chairman said they have recovered `90 crore from selling the shares it had as security from the UB Company, which has gone bankrupt, against more than `100 crore. "Around `6-7 crore are left now. We are hopeful to recover it too," he said.
ON CROSS-LoC BANKING
Bank chairman Mushtaq Ahmad said the proposal of opening J&K Bank's branches in Pakistan-occupied Kashmir's Mirpur and Muzaffarabad "were not taken up seriously at the highest level so far". "This is to be decided by the two countries," he said.
ON PROPERTY AUCTION
The J&K Bank said it's ready to implement the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The Act allows banks and financial institutions to auction properties (residential and commercial) when borrowers fail to repay their loans. It enables banks to reduce their non-performing assets (NPAs) by adopting measures for recovery or reconstruction.
"There were some concerns raised by the state government. It approached the ministry of finance for some amendments before being implemented in the state. The state's law and revenue departments are also studying it. The central law is yet to be implemented as the state assembly has to pass a bill regarding the same to make it an act," he said.
ON LOANS TO SELF-HELP GROUPS
The bank said there is no need to have government employees as guaranters. The bank is also planning to reach out to 2.5 lakh artisans. It has already lent loans to 70,000 fruit growers in the state.
ON IMPROVING SERVICES
The J&K Bank is earmarked separate funds of `1,000 crore to upgrade staff's efficiency. "We are taking a series of measures. Several employees were sent outside the state for hands-on training. Besides, the bank is seeking services of retired bankers, the bank chairman said. He added that the bank has not reached the culmination point so far. "There is more to be done."