With bank loans amounting to around Rs 5,000 crore turning ‘stressed loans’ due to ongoing unrest and stopping of economic activities, financial experts and stakeholders here have stressed upon the JK government to take up the matter with the central government in order to safeguard interests of both banks and borrowers.
As per bank officials, there are around 2 lakh account holders who have failed to pay equated monthly installments (EMIs) for over three months, putting them under stressed assets category.
Sources informed Kashmir Post, that the banks in J&K are governed by the Reserve bank Of India (RBI) rulings, which means that they cannot restructure stressed loans on their own. “It means that they have to approach RBI or Union finance Ministry who can then pass on directions to RBI about rescheduling of EMIs or increase in moratorium period.”
CEO and Chairman J&K Bank, Parvez Ahmad, while talking to a local news gathering agency KNS has stated that the restructuring of the stressed loan has been taken up with the concerned quarter.
“I clarify that restructuring does not mean waiving of the loan amount but issue regarding rescheduling of EMIs with moratorium period shall be looked into,” he said.
The Bank Chairman added that rescheduling of EMIs shall be done under the specific directions of the Reserve bank of India (RBI).
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.
In view of prevailing situation, financial experts and stakeholders here stress upon the state government to take active part in pursuing centre government to take out the business community and borrowers out of financial quagmire which they have got into due to non-operation of businesses and continuous shutdowns.
Banks in Kashmir are facing heat due to ongoing unrest as their business has dwindled while at the same time the recovery of loans has witnessed slowdown.
“Most of the banks are facing the brunt of the unrest,” a senior bank executive informed adding that the major share of market in banking in the state is held by J&K bank which means that out of Rs 5,000 crore stressed loans, JK bank has major share.
To mention, J&K Bank is already facing mounting NPA ratio, the bank in Q4 has showed Rs 56.02 crore loss quarter ended March 2016.
In the last more than three decades it is for the first time that the bank registered the loss. The total income of the bank decreased to Rs 1,805.33 crore in the three-month period (Q4) as against Rs 2,023.50 crore in the year-ago period.
As per bank officials, the central government once approached by the state government can take call on complete restructuring of stressed loans.
“Union Cabinet has the powers to take decision for waiving of interest, complete restructuring of loans and operations of non operative accounts in the state,” they said.
Continuous shutdown and frequent curfews resulting in stoppage of economic activities in Kashmir for the past four months have turned around 2 lakh loan accounts into Non-Performing Assets (NPAs) following the borrowers’ inability to pay Equated Monthly Installments (EMIs) on time.
The grim fiscal situation has created panic among stakeholders who are now asking banks to restructure their loan accounts.
