SRINAGAR: The Federation of Chambers of Industries Kashmir (FCIK) has submitted a fresh representation to Chief Minister Omar Abdullah seeking government support for a structured resolution of legacy non-performing assets (NPAs) under a proposed Special One-Time Settlement (SOTS) Scheme currently under consideration by Jammu Kashmir Bank.
In its submission, copies of which were also shared with senior government authorities and the bank’s management, FCIK called for a calibrated, non-discretionary and non-discriminatory SOTS framework distinct from routine OTS mechanisms. The Federation emphasised that such a structured instrument is necessary to address long-standing MSME NPAs, restore entrepreneurial confidence and enable distressed units to restart operations.
FCIK urged the Government, as the major equity holder in JK Bank, to facilitate formalisation of the scheme as a legacy-closure mechanism aimed at resolving accumulated stress rather than offering concessions. It said the proposed framework would help recover stuck assets, improve the bank’s balance sheet clarity, revive credit culture and unlock fresh economic activity in the region.
Referring to regulatory precedents issued by the Reserve Bank of India and settlement models adopted by public sector banks, FCIK stated that the proposed SOTS aligns with current MSME classifications and prevailing economic realities.
Highlighting the historical role of JK Bank during periods of turbulence, FCIK noted that the institution remained the principal financial lifeline in the region when other banks scaled down operations. It added that over 90 per cent of the bank’s deposits continue to originate from within the Union Territory, forming a stable and low-cost funding base that has supported consistent growth and profitability.
The Federation submitted that this mutual trust between the bank and the people should guide a balanced resolution of legacy NPAs, which it said largely reflect accumulated economic stress rather than willful default.
Among its key proposals, FCIK recommended that the SOTS cover NPAs up to Rs 50 crore. The suggested framework includes waiver of unapplied and penal interest, rational principal settlement with calibrated haircuts, inclusion of failed OTS cases, technically written-off accounts and accounts under litigation. It also proposed delinking relief from collateral value, reducing the upfront payment requirement to five per cent for processing applications and allowing a repayment window of up to two years under a transparent, rule-based mechanism without subjective exclusions.
FCIK also expressed concern over the resurfacing of SARFAESI “name and shame” notices and e-auction advertisements in local newspapers. It said that these recovery measures, which had remained restrained for nearly a year following assurances of a forthcoming solution, were causing financial and reputational harm to distressed entrepreneurs.
The Federation urged that coercive recovery actions be temporarily suspended pending formal notification of the SOTS Scheme to allow eligible units an opportunity to resolve liabilities under a structured framework. It added that recovery proceedings could resume against borrowers who do not avail of the scheme after an adequate time is provided.
Stating that economic renewal in Jammu and Kashmir cannot be built on unresolved historical stress, FCIK said a time-bound and structured SOTS could serve as a landmark initiative to resolve accumulated distress and lay the foundation for renewed growth, investment and employment generation.
The Federation reiterated its willingness to cooperate with the Government and JK Bank to ensure smooth and effective implementation of the proposed scheme.
