Excelsior Correspondent
SRINAGAR, Oct 10: Chairman of Jammu and Kashmir Bank, Parvez Ahmad, today warned of no bottomline growth for the bank in the next one and a half year and said that the unrest has further complicated the financial situation.
Addressing his maiden press conference here after taking over chairman of the Bank, Parvez said that due to no growth for 18 months, there will be no dividend, no tax provisions and no contribution to the Corporate Social Responsibility (CSR). He, however, said that the bank will focus on recovering bad loans and minimising losses in the next 18 months.
The chairman of the Bank said that the banking industry is passing through very tough times due to the economic slowdown as well as the prevailing political environment, and the bank expects slippages in the coming months. “Banking industry in India is crippled with huge stress on the asset book many of its peers are having an alarming NPA level of close to 20 per cent and our’s is also in the range of 9.3 per cent on the basis of numbers as on June 30, 2016”, he said.
Pervez said there will be further slippages in the portfolio of the Bank. “Our September numbers shall be unveiled in a couple of weeks and we expect further slippages in our portfolio because some of our assets, which have been restructured and under the stress, are not turning around… These slippages will continue further in the coming quarters also”, he said.
The chairman said that situation has become further complicated on account of the unrest in Kashmir. “So, in the given circumstances, we feel that against a profit of Rs 460 crores, which we have registered during the previous financial year, there will be no bottom-line growth during the current financial year and also this may continue in the second half of next financial year”.
J&K Bank’s NPA coverage ratio, which was considered one of the best in the industry, has diluted considerably during the last two-and-a-half years. “From 94 per cent, it has come down to 50 per cent and with further losses, there are chances, he said, adding, “if we will not provide sufficient and effective balance sheet, the coverage ratio will come down.”
Parvez said the losses would have an impact on the network, which would also require the Bank to augment its capital base. “So, our focus will remain now on consolidation and cleaning of the balance sheet for the next 4-6 quarters with a moderate growth, without compromising on the quality, in the range of 10-15 per cent. Once we are sure that we are done with the cleaning of the balance sheet, we will again revive the growth trajectory and also ensure that we return to the good old numbers,” he said.
The chairman said that the Bank has designed a strategy for recovery of Non Performing Accounts (NPA) that are mostly from outside the State. “The NPAs are in the range of around 10 per cent coupled with the stressed assets portfolio which is around 10 per cent more, that takes it to 20 per cent of our portfolio. We will be reducing our impaired exposure in the stressed asset portfolio through legal recourse, one-time settlements and through the asset reconstruction company”, he said.
Parvez said that his primary responsibility is to manage the safety and security of the funds invested in the bank. “When I am taking over, I am taking over both its assets and its liabilities. It is my primary responsibility to manage the safety and security of the funds invested in JK Bank. The expectations are very high in the sense that if the NPA levels are not manageable, it becomes very difficult for us to focus on the stability as well as the growth. I need the stability of the institution in the first instant and once I build a platform for the safety and stability of my institution, then it will be very easy for me to look for a growth trajectory which will take care of the losses which we suffer in the first one-and-a-half year”, he said.
The chairman assured upgradiation of the services of the Bank. “I understand that the upgradation of the services needs time particularly the people at the front line who are interacting with the customers in day to day basis, that part will be taken care of and I assure that in the next two to three months, you will see some change happening in that aspect. But it is a long-term planning, give me a year and a half, I am sure there will be a marked difference”, he said.
The chairman said that the J&K Bank is willing to offer Islamic banking to customers in the State and would examine the proposal after taking the Reserve Bank on board.
“Well, we have not given a serious thought to it, but there is a lot of demand for Islamic Banking in the State. Few clients who do not want to have the interest on their saving bank accounts, we do not have the mechanism how to take care of that particular component. But, we will examine the proposal and we have to also take RBI on board,” he said.
Parvez said that subject to the proper examination of the proposal and the acceptance by the regulator RBI, the bank is “very much willing to offer this type of product line to the customers in J&K”.
Asked whether J&K Bank was feeling threatened with the influx of private sector banks in the State, the chairman said so far as the competition is concerned, do not compare apples with oranges. “So far as the JK Bank positioning is concerned, it has 63 per cent share on the asset side, 62 per cent share on the deposit side, out of 862 branches, 745 are in the State, out of 1030 ATMs, 950 in JK State, 90 per cent of the population is dealing with JK Bank, we have branch in every block of the State.
With these kind of numbers, I do not see what kind of competition we are talking of. We have a monopolistic character, we have dominance, but we also need to be humble and we need to be supported well in order to retain our dominant position because J&K State is central to J&K Bank and its existence and it is the primary source of deriving the key advantages. Other banks are only offering products and services, we are more concerned about the development of J&K State as a whole,” he said.
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