Another Director appointed, total now 9
*Will help bank overcome setback post Aug 5
Excelsior Correspondent
JAMMU, Feb 8: In a significant decision aimed at giving boost to Jammu and Kashmir Bank which has suffered some losses post abrogation of special Constitutional provisions of the erstwhile State in the absence of delay in returns from the borrowers and other factors, the Union Territory Government today decided to infuse Rs 500 crore capital to improve liquidity of the bank.
Meanwhile, the Government has approved appointment of Naba Kishore Sahoo another Additional Director to the Board of Directors of Jammu and Kashmir Bank in the Independent category. With his formal appointment whenever the orders are issued, number of total Directors in the Bank will go up to nine.
Authoritative sources told the Excelsior that the Jammu and Kashmir Government in its capacity as promoter and major stakeholder in Jammu and Kashmir Bank, has decided to infuse Rs 500 crore capital in the Bank to improve its liquidity and help the financial institution to tide over the temporary phase of losses which it had suffered due to uncertain conditions in the Valley post August 5 Central decisions in which special Constitutional provisions of the erstwhile State were withdrawn and it was converted into two Union Territories of J&K and Ladakh, leading to restrictions in the Valley.
“The Jammu and Kashmir Bank will receive Rs 500 crore capital infusion from the Government of J&K to meet Basel-III requirements and the funds will be released during last two months of current financial year of 2019-20, as the Government has already set aside the amount meant for equity infusion or recapitalization of the bank,” sources said.
Following the Government decision, the Board of Directors of the bank in a meeting yesterday considered raising of capital by the bank by way of preferential issue of specified securities to the UT Government, the promoter and majority stakeholder of the bank, sources said.
Worthwhile to mention here that Jammu and Kashmir Bank’s standalone net profit had fallen by Rs 52 crore to Rs 49.64 crore in the third quarter of 2019-20 as August 5 decision had impacted business activities and cash flows especially in the Valley. The bank has posted a net profit of Rs 103.75 crore in corresponding October-November period of the previous fiscal.
There was rise in bank’s gross bad loans as the Non Performing Assets (NPAs) rose to 11.1 percent of the gross advances as on December 31, 2019 as against 9.94 percent by the same period of the previous fiscal. However, the net NPAs had come down to 4.36 percent of net advance by end of December 2019 quarter from 4.69 percent a year ago.
The Board of Directors of Jammu and Kashmir Bank has also approved the appointment of Naba Kishore Sahoo as another Additional Director of the Bank in Independent category with effect from March 1, 2020 for a period of two years subject to approval of shareholders.
Sahoo had also served as Executive Director of Allahabad Bank and Canara Bank.
Following approval of Sahoo’s appointment as Director by the Government, number of Directors of Jammu and Kashmir Bank will go up to nine.
On January 11 this year, the Government had appointed two Directors to the Bank including Monika I Dhawan, Managing Director and Founder of Fusion Corporation Solutions Private Limited and Dr Rajeev Kumar Singh, a Chartered Accountant, who had earlier served in the Board of Directors of another nationalized bank.
Other Directors of the Jammu and Kashmir Bank included RK Chhibber, who is also Chairman and Managing Director (CMD) of the Bank, Dr Arun Kumar Mehta, Financial Commissioner (Finance) in J&K Government, Bipul Pathak, Principal Secretary to Lieutenant Governor Girish Chandra Murmu, Anil Kumar Misra, Vikram Gujral and Sonam Wangchuk.
The Government, it may be mentioned, has already set up a high-level Committee for bifurcation of the post of Chairman-cum-Managing Director of the Jammu and Kashmir Bank. The Committee will frame guidelines and suggest powers of the Chairman as well as Managing Director of the Bank after bifurcation of the post of CMD.
Meanwhile, expressing his gratitude to the Government, particularly the Lieutenant Governor Girish Chandra Murmu, for timely infusion of the capital, the bank’s Chairman and Managing Director (CMD) Rajesh Kumar Chhibber today said that besides improving the bank’s capital adequacy under the Basel-III norms, the capital infusion will substantially improve its risk bearing capacity.
He added that the much needed infusion shall also help the bank in revising its lending policies particularly towards the retail segment like housing, education, government sponsored schemes, agriculture etc.
Acknowledging the Government’s support, Chhibber added that as the promoter and majority stakeholder of J&K Bank, the Government has remained ever committed in its support towards the bank and the capital infusion is another glaring example of the same. The infusion, he said, will translate into growth and expansion and at the same time boost the confidence of all other stakeholders in the bank.
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