To streamline the system, JK Bank CEO directs examination of top 50 NPA accounts

File pic: Parvez Ahmed, J&K Bank Chairman and CEO

Tasavur Mushtaq

KL News Network

SRINAGAR

After being in chair for over two months, J&K Bank Chairman Parvez Ahmad Thursday called his first shot aiming at streamlining the system by issuing directions to examine the reasons of manifold rise in bank’s bad assets over the last few years. In the first instance, directions have gone to investigate the top 50 accounts that have gone bad.

In a communication to staff, Parvez conveyed that “due to huge NPA burden on the Balance Sheet of the Bank and implications there to,” it has become imperative to “introspect and examine the reasons” that have led to such a drastic situation pulling the bottom-line of the bank into “deep red”.

Parvez as per the circular, sources suggest, has directed bank’s Vigilance Department to examine the staff accountability in the first instance and fix responsibility immediately for wrong doings and deficiencies in the appraisal and sanctioning of top fifty NPA accounts of the Bank.

Besides, Ahmad directed the legal department of bank to examine the legal documentation part and deficiencies. The examination as per the bank sources would be carried by the designated teams who are directed to ensure rectifications and fixing responsibility for short comings.

Taking note of the steady fall in the provisioning of the bank in last few years, the CEO has directed the Vigilance Department to immediately fix the responsibility for short provisioning undertaken towards impaired assets during previous periods. “This has drastically impacting our bottom-line for the current fiscal and multi-laterally dragged down our standing credentials,” he communicated.

The quick decision making has been welcomed by the staff. President J&K Bank officers’ Association (JKBOA) Riyaz Bhat said that this is a “welcome change in the working environment of the bank.”

Communication to the work force of the bank through e-mail, immediately after the directions, Riyaz alleged that in past when the concerns where raised about the deteriorating asset quality of the bank by the staff, it was seen “with an eye of suspicion and the concerns were ridiculed by the henchmen of perpetuators of these serious crimes.”

Riyaz while appreciating the role played by the new leadership said that “as promised, the enforcement of accountability in case of poor appraisal and exposure have been given a head start.” He further said the process should reach the conclusion by fixing the responsibility.

J&K’s finance minister, Dr Haseeb A Drabu, insiders said, in a recent meeting has expressed his keenness to see a clean balance sheet and a clear process to understand how the bad assets spiralled up. In a recent meeting with bank’s top management, he had laid emphasis on having a strong balance sheet and viable future strategies as per market requirements.

Pertinently J&K Bank is under stress for mounting bad assets, mostly in the last few years. Bank’s net NPA was 0.28% in 2010, which on March 2016 was audited to be 4.31%. The gross NPA has mounted from 2.72% in 2010 to 8.32% in 2016.

The NPA coverage ratio of bank deteriorated from 90.13 % in 2010 to 56.15 % in 2016. In a clean up process and providing requisite provisioning, bank in last quarter (Jul-Sep 2016) booked loss of Rs 602 cr. This as per bank sources improved NPA coverage ratio by 400 bps over previous quarter (Apr-June 2016). By posting a net loss of Rs 602 crore for the Q2 ending September 2016, mostly on account of provisioning for bad loans, bank’s net NPA ratio jumped to 6.81 percent.

Given the unrest that has consumed almost half of the year, the bank swiftly moved the RBI with the support of the state government and managed a restructuring package that was announced recently. This has helped the bank to prevent slippages. Bank honchos say the cleansing process has been received well by the investors and the customers.

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