E-Paper
Growing focus on pan-India operations behind turnaround: J&K bank MD
The Jammu and Kashmir Bank (J&K Bank) has emerged as one of the fastest growing commercial institutions of the country with the highest quarterly profit and 17% advance growth, says its MD and CEO Baldev Prakash, in an interview with HT’s Srinagar bureau chief Mir Ehsan. The bank has recorded its highest-ever annual profit of ₹1,197-crore and is paying dividends to its shareholders at 50% of the face value of the bank share, besides active participation in the Group of 20 (G20) meetings being held in Srinagar. Edited excerpts.
Being UT’s one of leading banks, what is current status of J&K Bank vis-à-vis growth and loss?
Presently, after achieving its highest ever quarterly as well as annual profit, J&K bank is one of the fast-growing commercial institutions in the country. The bank has recorded its highest-ever annual profit of ₹1,197-crore. Our advances growth is around industry average of 17% for the FY 2022-23, while as deposits have increased 6% year on year. We brought gross Non-Performing Assets down to 6% after eight long years besides improving our Capital Risk Asset Ratio to a decade-high of 15.39%. With our growing strategic focus on rest of India operations, our advances have increased 22% year-on-year, thereby taking the contribution of rate of interest to our overall loan book to over 30% during the FY 2022-23. This all began with a plan that was deliberated and discussed thoroughly in the bank’s maiden strategy conclave last year. We initiated business process re-engineering and took various measures to align the bank’s daily-functioning with business plan and the devised strategy and also engaged with our customers and after their feedback, took steps to improve client-service which helped in fostering growth.
How does the bank plan to tackle big defaulters, especially major companies outside J&K which turned NPA’s?
As on March 31, our Gross NPAs were at 6.04% and strategies are being put in place to bring the numbers to around 4 to 4.5% level by the end of current fiscal. The measures taken to tackle bad loans, the bank follows a uniform process to deal with all defaulters alike across its areas of operation and as per the laid down guidelines in line with regulatory norms. In case of big corporates, which borrow mostly through consortium finance, there are prescribed regulatory norms which the bank also follows in letter and spirit. In this regard, the trend and pace of resolution/recovery through National Company Law Tribunal has also started picking up and a good number of accounts are expected to be restored through Corporate Insolvency Resolution Process. Further, National Asset Reconstruction Company Limited (NARCL) has also started fast-tracked resolution process for the accounts assigned to it. Our bank has transferred or is in the process of assigning some big ticket non-performing Loans like Coastal Energen Pvt. Ltd, GMR Rajahmundry Energy Ltd and IL&FS Tamil Nadu Power Co. Ltd to NARCL. Other sales to ARC are also seeing some traction and will supplement the resolution of large-ticket NPLs.
How is the bank helping in J&K’s growth especially financial upliftment of local residents?
With a market share of over 60% in J&K, we see ourselves more of a developmental financial institution in the region. We take care of the most of social banking in both the UTs (J&K and Ladakh) primarily involving lakhs of old-age pensioners through direct bank transfer while serving most beneficiaries of social sector Centrally-funded schemes. Recently the bank contributed over 90% in the employment generation of 92,000 youth during the UT Government’s flagship programmes.
Why did J&K bank stop its Corporate Social Responsibility projects?
This year we have a handsome corporate social responsibility (CSR) budget that shall be utilised for the welfare of weaker and marginalised sections.
Has the bank shown any growth post abrogation of Article 370 and Covid-19?
I don’t see any correlation between the two issues. Yes, bank’s growth was affected by the Covid-19 pandemic and its continuation was clearly reflected in our FY 2020-21 and 2021-22 numbers, which is already story of a past. The bank has continued to grow steadily post abrogation of Article 370 as well. During FY 2019-20, when the Article 370 was abrogated, total advances of bank stood at ₹72739 crore at the year-end, which have increased to ₹90628-crore as on FY2022-23 registering an increment of around ₹17890 crore over the period of three years with a compound annual growth rate (CAGR) of 8%. The total deposits of the bank have also continued to grow year on year and have increased from ₹97788-crore as on March-2020 to ₹122038-crore as on March-2023, registering an increment of around ₹24250-crore over the period of three years with a CAGR of 8%. We have opened 88 branches during last five years across the country.
How is the bank helping out the key sectors of horticulture and tourism in J&K?
Our exposure in J&K UT is primarily to agriculture and mostly the commercial horticulture along with tourism industry is over ₹5,100-crore thereby employing around 2.5 lakh people associated directly with the two sectors. Catering to the financial requirements of horticulture and tourism sectors in the UT of J&K, the bank has in place various tailor-made schemes to help these sectors.
What is the state of bank’s corporate governance, especially in view an adverse CAG report?
Our bank has already strengthened the corporate governance framework by making the institution more transparent and accountable. We have communicated a detailed and point-to-point response to the Comptroller and Auditor General (CAG) and have taken the remedial measures in all the legacy cases referred to in the report besides fixing the staff responsibility wherever found necessary, implementation whereof shall remain subservient to the outcome of the related investigations.
Your take on a recent report regarding qualified opinion of auditors on bank’s employee stock purchase scheme during FY 2023?
During last FY 2021-22, the bank had raised almost ₹150-crore through an identical scheme, wherein the subscriber employees got good returns from their investment. We have taken care of their aspirations that the bank should first offer its shares to them. Bank’s Board of Directors approved raising of equity of up to ₹300-crore through ESPS in Q4 of FY 2022-23.The scheme was implemented in an identical manner like ESPS (2021-22) through Application Supported by Blocked Amount (ASBA) mechanism. There is nothing new in the scheme, from the earlier ESPS, except the amount, which was validated by the same set of auditors without any observations. However, they issued a qualification this year that some employees had transferred amounts from their pre-existing general purpose cash-credit/personal consumption loans to their savings accounts for subscribing to the issue. The bank has not sanctioned any loans to its employees specifically for purchase of its own shares. Owing to the difference of opinion with the auditors and as a matter of prudence and corporate governance ethics we have not included the amount of ₹338.31-crore mobilized through the ESPS while computing any financial parameter involving net worth or capital including the Capital Adequacy Ratio which despite this exclusion is well above 15%.
Has the bank played any role in G20 working group summit in J&K?
We were the major sponsors of few G20 related conferences including a Youth-20 Consultation Summit recently held at Kashmir University.
