KL NEWS NETWORK
SRINAGAR
With almost twenty percent of its assets stressed and additional slippages expected in next two quarters, J&K Bank’s new boss says the promoters will have to wait for next 18 months to see the best of the bank. He says his priority is the stability of the financial institution.
J&K’s only listed company is reviewing its growth strategy outside J&K and is hiring a top consultant to draft its new growth plan. The bank has declared 9.3 percent of its assets bad in the last quarter and nearly 10 percent more is stressed right now.
“In order to improve the bottom-line in the next six quarters, we may not have huge profits, we may not pay taxes and we will be conservative in our CSR spending,” Parvez Ahmad told a press conference, within a few days of taking over. “The provisioning ratio has nosedived from more than 90 percent to merely 50 and it will have to be reworked.”
Parvez said part of the new strategy envisages conservative growth targets – of not more than 10-15% in the mainland India, and investing only in quality assets. “This growth review is especially for the non-J&K geography where we have almost eight percent of our impaired assets,” Parvez said. “J&K being home turf where we control more than sixty percent of the market, we remain unchanged.”
Other elements of the new strategy are to put more efforts in managing the stressed assets. He said some bad assets will be sold at a discount to the Asset Reconstruction Companies, some will be offered one time settlement and in certain cases, the bank will reinvest for a turnaround. In totality, it means restructuring nearly Rs 20,000 crore. He said these assets have gone bad in last five to seven years.
Parvez said they are hiring one of the top five consultant companies to devise a strategy that will help it approach future better across sectors. It will have an element of retraining its human resource. He refused that the stressed market and declining yields will prevent him from hiring more people. “We are the second major employer in the state after the J&K government and we will continue doing what we have done,” Parvez said, “Bank continues an appetite for more hands.”
Parvez Ahmad underplayed the emerging competitions from the second generation banks saying that J&K Bank has a monopoly over a territory and controls more than 60 percent of the banking sector in the state. He asked reporters not to compare apples with oranges. “Where comes the competition,” he asked. However, he said the consultant will help the bank identify improving the existing systems and taking them to the next level that suits the J&K market.
Asked about the prevailing situation that has literally frozen the economic activity in Kashmir, Parvez said the bank is the only expert institution that manages growth despite the situation being bad. “We now have more than 20 years of this experience of reporting growth in turmoil so we know how to go ahead,” Parvez asserted.
Admitting that the prevailing situation has created cash flow disruptions, Parvez said they have already approached RBI to help them offer some way-out to the clientele that has suffered because of it. It has to be approved by the state and the Union governments first and the process has been set in motion, he added.
Parvez took over as the new Chairman and CEO of J&K Bank on October 6 after Mushtaq Ahmad retired. He has been an insider in the banks since he joined it as secretary of the Board. Then he rose up the rank and eventually became bank’s first boss who was elevated to the position while in service.
