KL News Network
Jammu
J&K government has finally come out in support of J&K Bank. It is getting a fresh capital infusion of Rs 530 Crores in tranches.
Announcing the decision, Dr Drabu, a former chairman of the bank said he was “deeply pained” that “our premier institution” has been suffering “some serious lapses in corporate governance and management failures” over the last few years.
“As a promoter of the bank, we did make some efforts in the last two years to sort out the issues of asset quality without impairing the autonomy of the bank,” Dr Drabu said. “With a change in the top management and the board, the reality has now surfaced.”
J&K bank has declared NPAs of Rs 6,000 Crores as there is “significant under-provisioning” of impaired assets. This has led the bank to declare a huge loss of Rs 600 Crore for the quarter ending September 2016-17.
“Drabu said there will be more unpleasant news this year,” the minister said. “But I hope that the bank will go back to its profit making ways in the first or second quarter of the next financial year.”
To help the Bank on its road to recovery, the budget proposed equity infusion of Rs 532 Crore in two tranches. This will help the Bank in not only maintaining the required Capital Adequacy but also in financing new asset growth. A fall in the ratio can push the bank to a ban on lending under the existing banking norms.
But the fresh capital is not without conditions. “This money shall be given with the strict conditionality of the Board of Directors establishing accountability at levels wherever there has been and taking penal action,” the budget suggests.
