By Auqib Javeed | Kashmir Observer

The Bank Seems Well Placed To Register A Very Positive Growth In The Coming Financial Year: Expert

Srinagar- The Jammu and Kashmir Bank has achieved a historic milestone in its remarkable journey of public service by earning highest-ever net annual profit of nearly Rs 1200 crore in the last financial year, earning laurels within the Union Territory and outside

With a decade-high capital adequacy ratio of 15.39 per cent and NPAs at an eight-year low of 6.04 per cent, the bank also recorded its highest-ever quarterly profit of Rs 476 crore in the last quarter

“Jammu and Kashmir Bank has recorded Rs 1,197 crore as net profit for FY 2022-23 which is the highest ever annual profit,” a bank official told Kashmir Observer.

Terming the revenue figures “unprecedented”, the official said that the bank has constantly worked on its expenditures and rationalized it.

“One of the expenses would be audit expenses wherein the bank would spend a whooping Rs 22 crore annually—that too was rationalized and brought down to Rs 15 crore only,” he said.

Ejaz Ayoub, an economic researcher, told Kashmir Observer that the bank has been doing quite well in terms of cleaning its balance sheet from the last 6-8 quarters.

Ayoub said that bank’s growth in advances has been pretty robust and the NPA coverage at 86.30 and capital adequacy at 15.39 in particular, shows remarkable stability in the financials.

“Growth in deposits has been a bit off which has resulted in reliance on costly borrowings. Growth in the investment portfolio too has not been in sync with the rest of the balance sheet,” Ayoub said, adding “With core economic sectors showing signs of recovery and stable fundamentals, the bank seems well placed to register a very positive growth in the coming financial year,”

The business community in the Valley also feels that the new working method and digital transformation journey of the bank has benefited the traders and other entrepreneurs.

President, Kashmir Chamber of Commerce and Industry (KCC&I), Javid Ahmad Tenga said that the bank’s dealing with the traders is improving.

“The bank is now disciplined and the process is going on. There are some issues that we will take up with the higher authorities. We’re hopeful that they will be addressed,” Tenga added.

He suggested the bank to empower branch heads and zonal heads to take call on overdraft facilities to its customers. He also said that there should be the facility of one time settlement (OTS) scheme for the traders as well.

Sources said, the bank has introduced Straight Through Process (STP), extended branches, revamped credit structures, improved the customer care call system and established large credit units, popularly known as LCUs – across all Zones.

Sources further said that J&K bank has financed 96000 youth in the “Back to Village” programme of the Lieutenant Governor Manoj Sinha led dispensation in a year.

Commenting upon the annual numbers, MD & CEO Baldev Prakash said, “With historic yearly profit, highest-ever quarterly net, decadal high CRAR, best asset-quality figures over last 8 years; it’s a great feeling to deliver better-than-promised annual numbers. I feel completely satisfied to see that we have gotten better at operating our business efficiently.”

“Looking back to March 2022 with these sets of numbers, I see an unmistakable shift in performance as well as the functioning of the Bank. Right from financials, operations and business to compliance and vastly improved corporate governance, the leap from turn-around to transformation is quite perceptible as well as promising,” he added.

However, the sources said that auditors were ‘unhappy’ with rationalizing audit expenses.

The people questioning the methods used in declaring financial results, they said, have now pleaded for intervention from the Reserve Bank of India (RBI).

The sources said that the auditors have put a “qualification” on the financial results and that the Employees Stock Purchase Scheme (ESPS)  implementation needs to be looked at.

“Bank sought the opinion of a leading law firm that has opined that the bank’s version is justified.  But as a precautionary measure the bank has not taken the amount of ESPS amounting to some 300 crores into account in the balance sheet that would otherwise further strengthen the CRAR,” sources said.

In a recent interview to a New Delhi based newspaper banks MD & CEO said, “The scheme was implemented in an identical manner like ESPS (2021-22) through Application Supported by Blocked Amount (ASBA) mechanism. The scheme was over-subscribed and pro-rata allotment was made”.
He said there was nothing new in the scheme from the earlier ESPS, except the amount, which according to him was validated by the same set of auditors without any observations last time.

“However, they issued a qualification this year that some employees had transferred amounts from their pre-existing general purpose cash-credit/personal consumption loans to their savings accounts for subscribing to the issue,” Prakash said.

J&K Bank MD and CEO reiterated that the bank has not sanctioned any loans to its employees specifically for purchase of its own shares. “However, owing to the difference of opinion with the Auditors and as a matter of prudence and corporate governance ethics we have not included the amount of Rs 338.31 Crore mobilized through the ESPS while computing any financial parameter involving Net-Worth or Capital including the Capital Adequacy Ratio which despite this exclusion is well above 15%. Besides, we have made adequate disclosures regarding this matter in the ‘Notes to Accounts’”, Prakash said.


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