State government’s hindrance to declare Kashmir as ‘riot affected/ disturbed area’ as per RBI’s Reserve Bank of India guidelines to qualify stressed loan accounts for rescheduling has resulted in start-ups, entrepreneurs, businessmen and transporters to face the brunt of financial crunch.
Thousands of unrest hit start-ups in Kashmir are in an immediate need of capital for resumption of business activities following five-month long shutdown in Kashmir that halted the commercial activities.
While at the same time businessmen and transporters are finding difficult to repay EMIs due to prevailing situation which has left them incapable of running their businesses due to lack of capital and burden of repayments.
Chairman of Jammu and Kashmir Entrepreneurship Development Association (JKEDA), an amalgam of 3200 entrepreneurs, Aijaz Ahmad said that the state government’s delay in declaring Kashmir as ‘riot affected’ has affected chances of business revival.
“If at all enhancement of the loans are needed that shall be provided in a hassle free and guarantor free manner as last more than four months of unrest have rendered entrepreneurs penniless,” said Ahmad, stressing on restructuring loan accounts.
“Neither are we wilful defaulters nor we want interest waiver but just make an appeal for restructuring of bank loans. Most young entrepreneurs are not in a position to pay their EMIs (equated monthly instalments), which generally ranges anywhere between Rs 10,000 to Rs 25,000. Youngsters running start-ups, who have been encouraged by the state government to establish business are now under tremendous pressure with regular deductions of the EMIs taking place,” Aijaz said
Similarly, the transporters are also facing the brunt of the unrest as their work has been mostly affected rendering them in a position where they are not able to repay loans.
“We just want restructuring of our advances, we are not demanding waiving off of loans but urge financial institutions to gives us time and not deduct EMIs or harass our guarantors to pay EMI’s ,” said Secretary Transporters Welfare Association, Muhammad Yusuf.
Halting of economic activities in Kashmir for the past about five months have turned around 2 lakh loan accounts into non-performing assets (NPAs) following the borrowers’ inability to pay EMIs on time. These accounts also include that of thousands of young entrepreneurs.
As per bank executives, the continuous lockdown for over four months has turned Rs 5000 crore loan amount into ‘stressed loans’ for financial institutions in Kashmir, of which major brunt is being faced by state’s premier financial institution, Jammu and Kashmir Bank.
President, Kashmir Chamber of Commerce and Industry, Mushtaq Ahmad Wani said, “There is liquidity crisis in market, coffers of business community have dried up due to prevailing situation and only hope lies in restructuring of advances which would give breather to the economy to recuperate.”
PDP-BJP government’s failure to respond to the communication from Reserve Bank of India seeking its opinion about declaring Kashmir as ‘riot/disturbance affected’ in view of ongoing unrest has resulted in RBI turning down plea of State Level Bankers Committee for rescheduling/restructuring of loan accounts, officials informed.
Sources informed Kashmir Post that the procedure for seeking restructuring or rescheduling of loan accounts in places where there have been any disturbances is a simple process where SLBC approaches RBI.
“Government is not ready to declare Valley as affected as was the opinion sought by the RBI, the reason behind is that it would give legitimacy to the unrest and then business community would seek compensation from the state government,” official sources said adding that “otherwise declaring any area as riot affected doesn’t even need consent of the government but district magistrate can declare it at his level and convey it to the SLBC as per the RBI Master Directions.”
