SRINAGAR: Federation of Chambers of Industries Kashmir (FCIK) has urged upon J&K Bank authorities to withdraw their latest decision regarding levying of “Commitment Charges” on unutilized portion of the loans and credit lines provided to the enterprises.

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While expressing its displeasure, the apex industrial body in a statement issued for media informed that it was for the first time in the history of J&K Bank that borrowers were being made to pay for loans or the portion of loans which actually they didn’t lift or utilize. The bank would not so far levy such charges probably in acknowledgment of un-conducive working atmosphere.

According to the guidelines issued by RBI, levying of commitment charges was not mandatory upon the financing banks but discretionary, and it was left to the wisdom of banks to charge or not to charge it, informed FCIK.

“If the plea of the bank was that they could have earned interest on the unutilized portion of loan, had they lend it to other borrowers, the question could be asked about the gap between their credit flow and permissible limit of lending which continues to be huge despite some narrowing in the recent past,” reads the statement.

FCIK agreed that J&K Bank had been extending some small concessions including waiver of commitment charges to the borrowers of Jammu, Kashmir and Ladakh, but that was only peanuts in reciprocity to the gesture that 88.2% of the total deposits of the bank comes from the kith and kin of these borrowers at an unprecedented low rate of  just 3.67%  which was the lowest than available to any other national or commercial bank in the country.

While criticizing the decision, FCIK questioned the wisdom of the bank to perceive that the condition of entrepreneurs had changed to better now to take additional brunt even after facing long spells of business interruptions from 2014-floods to the aftermath of Covid-19 situation. The bank should know that currently the product market appetite ran at its lowest ebb for the complexities caused by these situations besides change in policies which obviously resulted in lifting of lower amounts from sanctioned credit lines, reads the statement.

Hailing the prudent entrepreneurs for lifting only the required portion of amount out of their sanctioned credit line in tune to market demand of their products, FCIK cautioned the bank not to force them to lift entire sanctioned loans for illegally siphoning it off towards any other non-bonafide activity. It was as such imperative upon the bank to withdraw the decision of levying commitment charges till the product market appetite stabilized.


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