SRINAGAR: The Jammu and Kashmir government has admitted that the JK State Cooperative Bank has been running in losses since the financial year 2019–20, following a major loan fraud involving over Rs 223 crore. The revelation came in response to a question by Ali Mohammad Dar in the Legislative Council.
According to the official reply, the bank sanctioned a loan of Rs 223 crore to the River Jhelum Cooperative House Building Society, which subsequently turned into a Non-Performing Asset (NPA) and was declared a fraud on the recommendation of the Audit Committee. The entire amount had to be provisioned as a loss, pushing the bank into a prolonged financial crisis.
Further compounding the bank’s instability, the elected board of directors was superseded in 2020 and replaced by a nominated board chaired by the Divisional Commissioner. However, the High Court later quashed the nomination, and the bank has been functioning without a board since October 2022. The Additional Commissioner Kashmir is currently functioning as Acting Managing Director on an interim basis.
The government also acknowledged that the loan had been sanctioned against a mortgage of 257 kanals and 19 marlas of land in Shivpora, Srinagar—popularly known as the “Seed Farm”. However, recovery of the loan has hit legal roadblocks. The land was attached by the government in 2020 and is now provisionally seized by the Enforcement Directorate under the Prevention of Money Laundering Act, with the adjudicating authority confirming the attachment in February 2024.
The bank has filed an appeal against the attachment with the Appellate Tribunal in New Delhi.
In a further admission, the government stated that employees of the bank have not received Dearness Allowance or annual increments for the past four years. The release of these pending benefits is reportedly under consideration, pending formal approvals from competent authorities.
The unfolding crisis has exposed serious flaws in governance, oversight, and risk management at one of Jammu and Kashmir’s oldest cooperative banking institutions.
