Data revealed about the banking operations in Jammu and Kashmir in the last six months suggests an improved credit off-take by the corporate and gradual depletion of advances and low credit appetite in local markets, Masood Hussain reports

Dr Arun Mehta (IAS), the Jammu and Kashmir Chief Secretary at a function of the Jammu and Kashmir Bank in Kashmir. Image: DIPR

If the figures tabled at the last bankers meeting for the first half of fiscal 2021-22 are any indication, the economy is at a slow pace in Jammu and Kashmir. The deposits were slightly lower than the end of the fiscal 2020-21 and the growth in the loan book is modest. The accounts under stress have increased in the last six months.

Though the Jammu and Kashmir Bank continues to be the key player in managing Jammu and Kashmir’s deposits and credit, in the last six quarters the State Bank of India (SBI) is exhibiting an unprecedented growth trend in its credit owing to the huge uptake of the corporate loans. These major companies that mostly operate from outside Jammu and Kashmir, have evolved their business interests in Jammu and Kashmir in recent years. This could be linked to the new industrial policy of the Jammu and Kashmir government that is keen to bring in a huge investment.

The banking sector had set a target of extending credit of more than Rs 44980 crore for the current fiscal under priority and non-priority sectors in Jammu and Kashmir. In the first six months, the achievement is stated to be forty per cent, more in commercial loans than in the priority sector. In the last fiscal, 2021-21, the banks have achieved only 69 per cent of a credit plan of Rs 44630 crore. Interestingly, the personal loan, interestingly, has exhibited a huge appetite.


By the end of September 2021, the banks operating across Jammu and Kashmir have Rs 148539 crore in their vaults. This is slightly less in comparison to the end of last fiscal when it was Rs 148677 crore. This essentially means that people either are spending their earnings or they have nothing much to keep parked with the banks. The figures at the end of the fiscal are usually up in case of deposits, a situation that hugely alters in the rest of the year. The banks, however, said that the September 2021 deposits are 6.34 per cent more than they were a year ago in September 2020, at Rs 13984 crore.

What is interesting is that JK Bank continues to hold the major chunk of deposits – Rs 93722 crore, which is 63.09 per cent of the entire saving vault in Jammu and Kashmir. It is followed by the SBI with Rs 20008.39 crore, PNB by Rs 9925.16 crore and HDFC Bank by Rs 5492.80 crore.

Lt Governor distributing Aadhaar Enabled Payment Systems under JKRLM to promote digital banking & financial services in remote areas


Jammu and Kashmir’s entire loan book at the end of the first half-year of the current fiscal stood at Rs 82085.18 crore, a figure marginally improved from Rs 77867.37 crore at the end of March 31, 2021, by Rs 4217 crore. Data suggests that the credit off-take improved by 16.59 per cent in 12 months but in the last six months, the improvement has been quite thin indicating a low credit appetite.

Of the entire loan book, JK Bank manages 69 per cent, followed by SBI with 14 per cent. All other banks have a credit share of not more than four per cent of the overall loan book.

What is interesting is that SBI is emerging as a major player in corporate finance, a status that was earlier with the JK Bank. By the end of September 2021, SBI has advanced Rs 4717 crore as corporate advances, which is almost three times more than Rs 1758.22 crore that it had advanced to corporate a year earlier. JK Bank’s corporate advances are at Rs 486 crore, slightly less than that of PNB.

Banks, however, said that the growth in advances on a year-on-year basis is more than 16 per cent which is not bad. What is interesting, however, is that the net addition in the loan book for the year ending September 2021, is Rs 11681 crore of which Rs 5743 crore is the corporate advance leaving less than half (Rs 4238 crore) that was advanced to non-corporate in Jammu nd Kashmir.

Credit Deposit Ratio

Normally the ratio of credit to deposits is seen as a basic indicator of the functioning of the banking sector in a particular space. The overall CDR of the sector is at 56.58 per cent. Usually, the JK Bank used to have a better ratio but the advancing of a good amount to the corporate sector has phenomenally improved the tally for SBI. Right now the CDR for SBI is 75.42 per cent and that of JK Bank is 57.04 per cent. Even PNB has a CDR of 24.31 per cent.

Credit Appetite

The Kashmir and Jammu regions have traditionally exhibited a contrast in the credit appetite. While Jammu has low hunger for credit, it is completely reversed in Kashmir. Kashmir has less money in bank vaults in comparison to Jammu; thanks to the operations of the major businesses from Jammu including the central public sector. That is exhibited by the credit deposit ratio.

In Jammu, for instance, banks hold overall deposits of Rs 88989.27 crore and the total credit off-take by the end of September 2021 was at Rs 33058.50 crore. This makes a modest CDR of 37.15 per cent. The banking sector has only Rs 1840.52 crore as gross NPA in the region.

Kashmir is a different story. It has only 55806.09 crore in deposits against which the advances stand at Rs 41545.67 crore thus taking the CDR to 74.45 per cent. Obviously, the stressed assets are also in that proportion. The gross NPAs in Kashmir are at Rs 3161.51 crore.

There is yet another interesting trend. For many years, it was the tiny Shopian district that would top the credit chart across Jammu and Kashmir. It continues to be so. Against deposits base of Rs 1138.34 crore, the advances stand at Rs 1831.69 crore at the end of September 2021, which makes a CDR of 160.91 per cent. The fascinating addition is that it is one of the lowest NPA districts with a gross NPA at Rs 51.52 crore, which is 2.81 per cent. This means the people are seeking bank help and repaying as well.

The emerging trend is that it is Kupwara that is chasing Shopian. Against a deposit base of Rs 2871.84 crore, the overall advances were at Rs 3304.42 crore. While its CDR is at 115.06 per cent, the border district is unable to manage its stressed asset properly. The gross NPA in Kupwara stands at Rs 141.90 crore which is 4.29 per cent.

Jamia Masjid Shopian. KL Image: Bilal Bahadur
Jamia Masjid Shopian. KL Image: Bilal Bahadur

The district to be seen by the end of this fiscal would be Budgam, in central Kashmir, which currently has a CDR of 98.78 per cent. However, Budgam is managing its assets better as it has gross NPAs at Rs 101.16 crore, which is only 3.06 per cent. While in the case of Shopian, apple is the prime driver, it could be real estate that is driving the credit appetite in Budgam.

No district in Kashmir has less than 50 per cent of CDR. The lowest credit deposit ratio, it is interestingly to mention here, is the capital Srinagar city which has a ratio of 53.88 per cent. Against the deposit base of Rs 26686.46 crore, the advances stand at Rs 14379.42 crore. Of this assets worth Rs 2120.15 crore (14.74 per cent) are under stress. This essentially means the Srinagar business is seriously compromised and it is paving way for peripheral districts to take over.

In the Jammu region, Doda is topping in credit appetite (CDR 55.77 per cent), followed by Ramban with 49.91 per cent. Jammu city, the erstwhile winter capital of Jammu and Kashmir, is moving at a snail’s pace. Against a deposit base of Rs 51517.74 crore, advances stand at Rs 16240.5 crore, which makes a CDR of 31.52 per cent. The gross NPAs stood at Rs 1404.67, which is 8.64 per cent of the overall advances. Most of Jammu business is hugely linked with Srinagar in particular and Kashmir in general. The situation in Srinagar might be somehow linked to a low business situation in Jammu too.

This essentially means that most of the income that the banking sector generates is from Kashmir because banks earn from loans only.

Priority V/S No Priority

At the start of the current fiscal, the banking sector had set a target of advancing an amount of Rs 44,980.57 crore in 12 months ending March 2022 in both priority and non-priority sectors. Cumulatively in the first six months, the achievement has been of the order of 40 per cent. But the analysis suggests that achievement in six months has been 88 per cent in the non-priority sector and only 27 per cent in the priority sector. Priority sector lending is fundamental to banking operations because they have a government focus and in certain cases, the government pays part of the interest.

The sub-sector that has shown massive growth in both the priority and the non-priority areas is the personal loan. Rs 5,309.48 crore is the amount that has been dispended in the personal loan category. It is higher than the key priority sector, agriculture, which has taken Rs 5037 crore only. Housing, education, industry – all sectors are showing stagnation, if not negative growth. Overall non-priority loans are exhibiting a doubling trend in comparison to the non-priority sector. the massive surge in personal loans is being seen as an indicator of increasing indebtedness at the individual level, possibly dictated by low growth in the economy.

Jammu and Kashmir Bank headquarters in Srinagar

Stressed Assets

The overall gross nonperforming assets for the banking sector in Jammu and Kashmir stand at 6.62 per cent of Rs 82085 crore. The NPA was at 5.98 per cent in September 2021, which means it has gone up by 2.01 per cent. Compared to March 2021 when the gross NPA was at 6.47 per cent, seemingly it has gone up by a marginal 0.15 per cent only in the last six months.

The NPA trend is more visible in the industry which has 9.23 per cent of overall advances of Rs 19301.52 crore (Rs 1780.57 crore) under stress. This is followed by agriculture which has overall advances of Rs 10706.11 crore of which 904.71 crore (8.45 per cent) is under stress. The banks have advanced Rs 6947.6 crore under PMMY (Mudra) of which Rs 235.9 crore is gross NPA (3.40 per cent).

There is a default in government-sponsored schemes as well. It is of the order of Rs 5.03 crore of Rs 254.31 crore in NRLM (1.98 per cent),   Rs 30.20 crore in an overall advance of Rs 1450.57 crore in PMEGP (2.08 per cent); Rs 6.26 crore in Rs 97.58 crore advanced under NULM (6.42 per cent) and Rs 1.6 crore of Rs 40.66 crore advanced to SC, ST and OBC (3.94 per cent). The NPA under Kisan Credit Card is at Rs 261.58 crore (4.45 per cent).


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