J&K banks report significant fall in NPAs
Banking sector in J&K has managed its assets better during the 2010 summer unrest compared with 2008 agitation. In the first half year it added Rs 33.60 crore to its bad assets if compared to a whopping Rs 136.67 crore of NPAs.
“The 2008 agitation impacted both the capital cities of Srinagar and Jammu,” one senior executive of a bank said. “Then, economic boycott was enforced that froze all economic activities but in 2010 there was nothing like that. There were difficulties in day business but supply channels remained undisturbed as night business continued.”
Triggered by a series of civilian killings, Kashmir remained either under curfew or separatist sponsored strike for most of the five months in summer 2010. It hit mainly the tourism as all other economic activities survived dented. After 115 killings and injured to over 2600 people including security men, Kashmir is normal for around a month now.
The total quantum of bad loans in J&K was pegged at Rs 767.04 crore at the end of the first half of the current fiscal ending September. The outstanding is part of the Rs 17268.74 crore of cumulative advances and investments that 34 banks operating through 1,267 branches across the state have made so far. They have a deposit vault of `42446.50 crore from the state itself.
While common sense expected their NPAs to grow, they nosedived in certain cases. Punjab National Bank had a net NPA of Rs 80.29 crore at the end of March 2010 and after six months it improved to Rs 79.72 crore. “We liberally rescheduled all the critical accounts and in certain cases we took the OTS route to offer (interest) waivers as well,” said Ashok K Gupta, the regional manager of the PNB.
“We did actually ask for waiver of interest for the period curfew was imposed but there has not been any response so far,” Abdul Hamid Punjabi, the vice president of Kashmir Chamber of Commerce & Industry said. But most of the banks skipped offering any major concession to its clients. Instead, they rescheduled the payments. “We extended the return payment scheduled on client request as per the RBI norms and in certain cases we had to offer working capital term loans to enable parties to manage their accumulated interest burden,” a senior executive in a nationalised bank said.
Banks reduced their overall exposures. Their cumulative loan books suggest a net increase of only `151.08 crore in six-month suggesting recoveries were the main priority. Even the mandatory priority sector did not see much growth. The cumulative credit deposit ratio fell from 48.05% to 40.68% in last 12 months which is substantially low if compared to the national average is 60%. Against a target of disbursing ` 2,820.91 crore in a year under priority sector, the banks could manage releasing `1,202.51 crore in priority sector for the first six months which makes achievement of target by 43%.
It is 7% less than the achievement they made in the first half of the last fiscal. A peaceful Jammu offered a better credit off take than Kashmir. While Kashmir consumed `522.39 crore, Jammu got `658.89 crore leaving the Ladakh region with Rs 21.23 crore.
Small enterprise topped the list by taking `438.28 crore followed by `358.77 crore that went to housing sector as critical agriculture got `244.79 crore, micro credit took `139.39 crore. Only a paltry sum of `22.01 crore was advanced as educational loans. Non-priority sector advances were at `666.71 crore in last six months.
J&K Bank continued retained the leadership by recording a credit off take of `785.15 crore followed by SBI with `102.13 crore and PNB by `52.01 crore. Of the `17268 crore of advances and investments in the state, J&K Bank holds a lion’s share of Rs 12174 crore.