Parvez Ahmed, Chairman J&K Bank Ltd; in conversation with Arjimand Hussain Talib, Editor-in-chief, Ziraat Times

At a time when state-run banks in the country posted a combined loss of Rs 85,370 crore ($12.65 billion) in 2017-18, Jammu & Kashmir Bank’s Rs 202.72 crore profit for the same financial year has been received with an intense sense of relief and jubilation in Jammu & Kashmir.

These are no good times for the banking industry in India, with myraid issues, like balooning non-performing assets and high-profile bad loan cases, dampening the financial sentiment. At the all-India level, all but two of the 21 banks in which India owns a majority have plunged into losses in the March quarter after the Reserve Bank of India in February withdrew half a dozen loan restructuring schemes and put in place other curbs.

In this backdrop, J&K Bank’s profit orientation reflects that the bank has done its risk analysis of the market and the bank products well and that risk management is working.Mr. Parvez Ahmad

For understanding the bank’s overall strategy of maintaining its market leadership in Jammu & Kashmir, its growth vision towards transforming the bank into a high-efficiency and robust financial institution, Ziraat Times Editor-in-Chief, Arjimand Hussain Talib spoke to Parvez Ahmed, Chairman and Chief Executive Officer (CEO), J&K Bank last week. 

Here are the excerpts of the interview: 

Arjimand Talib: Let me begin with congratulating you on your financial results. It has come as a pleasant news for the people of J&K and the bank’s larger clientale base. Kindly take us through some of the key figures and your own reflections on how the bank performed so well amid the grim industry scenario.

Parvez AhmedThank you very much. As you rightly put it, the industry scenario in terms of the annual performance of both public and private sector banks is quite disturbing with only a few exceptions. But thanks to the institutional effort that J&K Bank made, we have successfully managed the turnaround and the worst seems to be far behind us now.

Displaying our unique resilience during turbulent times in banking industry, we registered a profit of Rs 202.72 Cr for the financial year 2017-18 and Rs 28 Cr for the Quarter ended March 31, 2018. With a CASA ratio of 50.89 pc, NIIM of 3.65 pc, net NPA of 4.90 pc and NPA coverage ratio of 65.83 pc; we registered total business of Rs 140304.78 Cr comprising deposits of Rs 80006.50 Cr and advances of Rs 60298.28 Cr depicting a growth of 11.30 pc over the previous fiscal.

Within the state, we had a robust credit growth of 20 pc in line with our state-focused lending strategy.

Significantly, we accomplished the cleanup and consolidation. Concomitantly, we continued our succession planning exercise along with revamping of the organization structure with the aim of improving the systems and procedures to strengthen the culture of compliance. The focus was on the risk management and capital planning too for regulatory compliance and stability in growth over a longer period of time.

I would like to employ this opportunity to express gratitude towards our promoters, the state government, the regulator Reserve Bank of India who supported us well during the tough preceding year with their guidance and support.

Moving ahead, our focus will still be on conservation and augmentation of capital, NPA recovery, containing the slippages especially in the restructured portfolio and strengthening the compliance framework further. On the business front, we are targeting a balance sheet growth of 20 pc which shall be mainly driven by credit growth of 30 pc in J&K state where we see huge opportunity lying untapped in the retail credit.

Besides, we continue to introduce new customized products in the J&K state besides driving the push to sourcing of new retail loans to digital channels by targeting strategic tie-up with Government departments and institutional customers. Our digital transactions have already reached 48 pc of the total transactions.

Arjimand Talib: It is outstanding that all this is happening despite a general feeling that business sentiment in low in J&K today. From the bank’s perspective, how do you see the business environment in Jammu & Kashmir today?

Parvez Ahmed: The business environment in Jammu and Kashmir is good in terms of economic potential that this place has. Few months back, it was reported in media that J&K was at 22nd rank, up from its previous 31st position among other Indian states in the ease of doing business rankings.

It’s hoped J&K, wherein government was set to bring in 372 reforms and had cleared 270 by then, would soon be listed in the top 15 states in the list of ease of doing business in the country. And let me tell you, the state government is working consistently to create an enabling environment for the conduct of flourishing businesses in the state.

But as a bank, I think, we have been operating remarkably well during the last couple of decades despite all the uncertainties and have adapted to the circumstances here. And, we believe, that we will always try to perform at our best in whatever situation we are faced with.

Arjimand Talib:  Jammu & Kashmir Bank share prices, despite somewhat cautious business sentiment in financial markets today, have been doing relatively well. What factors do you see contributing in this performance?

Parvez Ahmed: Financial markets function more on the basis of perception and promise of a company and we have been able to manage quite well on both the counts.

There are various factors that contribute to this process. Foremost being the capacity to overcome the difficult times with confidence, which we have proved time and again as an institution. Lately, the banking industry has been going through very tough times but we had sufficient, if not enough, cushions to ward off the worst that came our way. And so far we have succeeded.

Arjimand Talib:  After the 2007-2008 crash in financial markets in India and globally, it seems a lot of stock market investors from Jammu & Kashmir have turned wary about investments in stocks. How do you see this wariness?

Parvez Ahmed: I don’t agree with the word ‘wary’ here. Rather, I see a growth in investments in stocks here both in volumes and the value. But yes, the investor is learning on the way and has become wise enough to diversify his portfolios besides becoming conservative in his/her approach towards market.

There is sufficient guidance available for the common investors in the state that also is making the difference. Our subsidiary JKB Financial Services Limited offers a wide range of services to the people of the state in this regard.

Arjimand Talib:   Introduction of GST to Jammu & Kashmir, especially its application to economic sectors that were exempt from sales and some other taxes, seems to have dented business sentiment in the state. How do you see this situation? Do you think a re-bound is possible in the medium or long term?

Parvez Ahmed: Introduction of GST has apparently affected the business sentiment in the state but applying any such reform at such scale was definitely going to give some teething problems in its implementation. However, the new regime will improve the long-term economic prospects because it enables to remove the trade barriers between states, which is good for inter-state business besides widening of the tax base.

It’s a kind of major transition that has affected all businesses in the state and will take some more time for them to normalize. The rebound will be there in both medium and long-term.

Arjimand Talib: How would you rate the existing investment climate in J&K?

Parvez Ahmed: Being a small population inhabiting mostly mountainous terrains and situated at the margins in geographic terms within the country, we have serious disadvantage in terms of location which raises the input cost and hinders access to markets. Adding to our woes is the current security environment and media-induced misperceptions regarding the situation here.

Therefore, public investment shall be the guiding force for any economic development to take place here and we shall continue to leverage our position as the flagship company vis a vis investments in the massive infra-structural needs of the state.

And we will continue to pursue the course of lending to private sector in critical areas like hydropower, healthcare, housing, tourism and education.

Ziraat Times:  J&K Bank remains the top credit provider in the state, including to the agriculture economy. Despite that, there still seem to be some challenges in meeting annual credit targets and recovery. How do you think the situation could be improved?

Parvez Ahmed: Let me give you a background scenario of what you are talking about. 

We have 43 banks operating in the state, which includes 21 public sector banks, 9 private sector banks, 2 Regional Rural Banks, 10 Cooperative Banks and JK Sate Financial Corporation. All these banks together have a network of 2039 branches spread across the length and breadth of the state. As convenor of the JK State Level Bankers’ Committee, let me share with you that all these banks have together extended a total credit of Rs.17,188.19 Crore in favour of 5,66,424 beneficiaries during the first three quarters of CFY ended 31st December, 2017 against annual target of Rs.28,841.64 Crore for 9,66,047 beneficiaries under Annual Credit Plan 2017-18, thereby registering achievement of 60% in financial terms and 59% in physical terms.

This includes Priority Sector credit of Rs.9,224.79 Crore disbursed in favour of 3,46,456 beneficiaries against the annual target of Rs.19,933.02 Crore for 7,40,847 beneficiaries (constituting 46% achievement in financial terms) and Non-priority sector credit of Rs.7,963.40 Crore disbursed in favour of 2,19,968 beneficiaries against annual target of Rs.8,908.62 Crore for 2,25,200 beneficiaries (constituting achievement of 89% in financial terms).

Notably, J&K Bank alone has disbursed Rs.12,319.61 Crore during the period under review, which makes for 72 pc of the total credit extended by the 43 banks and financial institutions operating in the State.

Performance of banks in Government Sponsored Schemes (GSS) in the State, against the Annual Action Plan 2017-18 target of Rs.539.40 Crore for 21,951 beneficiaries for all banks operating in the State, the achievement of banks under four major sponsored schemes viz. NRLM, PMEGP NULM and SC/ST/OBC stood at Rs.178.07 Crore for 8,035 beneficiaries in all the three regions of the State thereby achieving 33 pc of the target in financial terms and 37 pc in physical terms.

If you compare this performance with the years gone by, you would find improvement in meeting the envisaged targets. However, a lot needs to be done. As convenor of the JKSLBC let me assure you that we will continue to strive hard not only to meet the given targets, but surpass them in future.

As far as J&K Bank is concerned, the challenges in meeting annual credit targets are not due to the lack of disbursement on our part. One part of the problem is the kind of procedures the multi-agency scheme models. For a borrower needs to complete certain process before he/she can avail the credit from the bank. Once the process is followed we disburse the loans instantly in the borrowers account.

Arjimand Talib:  IT-enabled services of J&K Bank seem to be one area that require attention. ATM services and their hardware and software, for instance. Considering the competition from other private and public-sector banks, is the bank considering technology upgrades to meet customer satisfaction?

Parvez Ahmed: For last few years, banking has undergone a digital transformation across the country. We at J&K Bank are also in the middle of such process wherein we upgrade and improve the entire array of IT based services both in terms of infrastructure and human resource.

Let me tell you that customer convenience has been one of our primary goals as a bank since inception and we shall carry forward this legacy as we continue our transition towards becoming the best service providers in digital banking within J&K.

Arjimand Talib:  Lately, the takeover of J&K Bank’s business operations by young professionals, mostly coming from management, commerce, finance and engineering backgrounds seem to positively transform the work efficiency of the bank. How do you see this transformation?

Parvez Ahmed: I cannot say takeover but yes we are fortunate enough to attract the best available talent pool in the state as we are the major employers after the government in Jammu and Kashmir. And yes the young and bright professionals from management, finance, commerce, information technology, engineering and communications have led the improvement in the work efficiency of the bank.

Our human resource, as of now, is the finest blend possible of energy and experience, aspirations and understanding, skills and knowledge. These promising officers are slowly but surely moving up the hierarchy to man critical positions and carry forward the legacy of this great institution to even greater heights.

Arjimand Talib: Given the precarious political situation, a lot of prospective investors and well educated young people are leaving Kashmir region. This seems to widen an economic and human resource vacuum here. How do think the situation could be improved?

Parvez Ahmed: I feel more sanguine to see many well educated young people returning to the state and investing in many areas like information technology, food processing, BPOs etc. So the reverse drain is also happening and making it kind of a cycle.

I agree that we shouldn’t allow budding entrepreneurs and prospective investors to leave the state. But the way forward is not to stop them. Rather we need to create an enabling environment for businesses of scope and scale here.

For that to happen, all the stakeholders in the collective welfare and development of this state need to engage with each other and contribute seriously and sincerely towards realizing the dream of prosperous and promising future for J&K.

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