But insiders in the banking sector said a consumer market that has Rs 40,000 crore purchase order in hand at any point of time in a year has capacity to attract lot of credit. It has been experienced earlier as well when the credit deposit ratio of banks peaked to new high. The only way-out is being slightly different and innovative. If the credit off take was better at the peak of strife, why it is gradually falling down when peaceful situations have improved industry, and services especially the tourism. If the ticket size of the loans under various sponsored schemes is reviewed, it will double the credit off take and reduce the defaults under these schemes. Most of these schemes fail because they have inherently low ticket size for decades together which destroys the promoter and the bank that funds it. Costs of systems and process appreciated over the years and the inflation put its own problems but neither of these schemes reflects this reality.
Banks not investing in the state because they lack the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Act (SARFAESI) cover that empowers the banking to take over the assets in case of default is seen as an exaggeration. It is not because it is the state laws are stiff and may not support the law in its present form (by the way, the law is extended to the state but was stayed by the high court).
The volume of NPA is exaggerated. By the end of March 2013, the total bad assets of the entire banking sector was at Rs 1216.75 crore which means slightly more than five percent. Of this, Rs 444.59 crore belongs to J&K Bank, Rs 168.46 crore to state controlled cooperative banks and another Rs 58.50 crore to the J&K Grameen Bank that is run by J&K Bank. It means Rs 671.55 crore NPAs are manageable within the state. It is only Rs 545.2 crore of NPAs belonging to various public sector banks that would require some sort of help from the state government.
Even the default in the sponsored schemes is not huge. It is only Rs 36.33 crore. The total outstanding under the sponsored schemes by the end of March 2013 is Rs 451.81 crore. The default includes Rs 13.06 crore in SGSY, Rs 4.99 crore in PMEGP, Rs 10.44 crore in JKSES, Rs 4.10 crore in 4.10 crore and Rs 3.75 crore is lying as default with SC, ST and OBCs.
