Centre readies to take charge of Jammu & Kashmir Bank after scrapping Article 370: All you need to know

  • The state government currently has close to 60 percent stake in the bank

  • With Jammu and Kashmir becoming a Union Territory, shares will be transferred to the Centre

  • With the transfer of the stake, the finance ministry will have powers to appoint the chief executive as well as the board of directors

Following the revocation of Article 370, the central government now readies to take control of Jammu & Kashmir Bank, which has so far enjoyed a special status in terms of operations, a media report said.

According to The Times of India, the finance ministry is looking at options to strengthen the bank, which has been hit by allegations of supporting terror financing.

 Centre readies to take charge of Jammu & Kashmir Bank after scrapping Article 370: All you need to know

Representational image. Reuters

The state government currently has close to 60 percent stake in the bank. With Jammu and Kashmir becoming a Union Territory, shares will be transferred to the Centre, the newspaper report said. With the transfer of the stake, the finance ministry will have powers to appoint the chief executive as well as the board of directors.

Meanwhile, shares of the bank hit the upper circuit with 10 percent jump to Rs 37.50 on the BSE on Tuesday.

Recently, the Anti-Corruption Bureau (ACB) of Jammu and Kashmir issued a notice to former chief minister Mehbooba Mufti asking her whether she had verbally or otherwise endorsed the recommendations made by some ministers in the PDP-BJP government for appointments in J&K Bank.

Mehbooba posted the notice on Twitter, saying she was not surprised by the development.

Jammu & Kashmir Bank last week reported a 58 percent fall in its net profit to Rs 21.87 crore in the first quarter of 2019-20 due to a rise in provisions for bad loans.

The bank had posted a net profit of Rs 52.59 crore in the April-June quarter of the previous fiscal.

Total income during the first quarter of 2019-20 rose to Rs 2,256.25 crore from Rs 1,897.24 crore in the same period of 2018-19, the bank said in a release.

On asset front, gross non-performing assets fell to 8.48 percent of gross advances as on June 2019, as against 9.83 percent by June end 2018.

Net NPAs also came down to Rs 4.36 percent from 4.46 percent a year ago.

However, the provisioning for bad loans and contingencies moved up to Rs 293.21 crore in the June quarter from Rs 255.01 crore in the same quarter of previous fiscal.

Allegations of supporting terror financing

In June, it was reported that the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) were likely to be roped in to investigate the Jammu & Kashmir Bank corruption scandal. The National Investigation Agency (NIA) was seeking to trace avenues through which terrorist groups have been getting money, according to The Economic Times.

In the same month, the Jammu and Kashmir government had removed J&K Bank Chairman Parvez Ahmad and appointed its executive president RK Chibber as an interim chairman.

The government said it decided to take long-term measures to improve the functioning of the bank so that it becomes an example of a well managed government-owned bank and Ahmad's removal was the first step in that direction.

In November last year, the Governor-led State Administrative Council (SAC) had approved the proposal for treating Jammu and Kashmir Bank Limited as a public sector undertaking (PSU) and to make it accountable to the state legislature, inviting criticism from its employees, who took to the streets in protest.

However, on 4 December, last year, after days of protests from various quarters in the state, the governor said the government will re-examine the issue of accountability to legislature.

With agency inputs

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Updated Date: Aug 06, 2019 13:58:05 IST