Ziraat Times Exclusive
Srinagar, July 24: Jammu & Kashmir Bank Ltd faces the prospect of a merger with a public sector bank, most likely the State Bank of India, BTVI, a national business media company reported today.
This latest development comes close on the heels of the transformation of J&K Bank into a public sector bank, RTI extension and removal of its chairman, Parvez Ahmed in June 2018.
A senior official in the Finance Ministry when approached by Ziraat Times confirmed that the merger talks are on “as part of the government’s larger plan of consolidating small, “loss-making” banks with large public sector banks”.
Speaking on condition of anonymity, the official said that this merger plan is being considered in the face of “unsustainable structural issues” having cropped up in J&K Bank in recent past.
Observers in Jammu & Kashmir see this development worrisome, for J&K Bank is widely seen as one of J&K’s strongest economic institutions.
State Bank of India (SBI) has already completed merger formalities of banks like State Bank of Bikaner & Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), State Bank of Patiala (SBP), State Bank of Hyderabad (SBH) and BMB.
On June 8, 2019, the Jammu and Kashmir government removed J&K Bank Chairman Parvez Ahmad and appointed R K Chibber as interim chairman of the bank.
The state government also approved a proposal that provisions of the J&K Right to Information Act, 2009, shall be applicable to the bank just like other state-owned undertakings. It now follows guidelines of the Central Vigilance Commission.
J&K Bank – History and Identity:
J&K Bank was incorporated on October 1, 1938 as a limited liability company to offer banking facilities in the state. The bank is licensed as an “old private-sector bank” under Section 22 of the Banking Regulation Act, 1949. Classified as a state government company, it is registered with Registrar of Companies, Jammu. It launched a public issue in 1998 and is listed on both the Bombay and National stock exchanges. While RBI as the regulator supervises J&K Bank, the Comptroller and Auditor General (CAG) audits the books of banks.
What made J&K Bank different
Jammu & Kashmir Bank is the only bank in India in which a state government holds a majority stake. In all public-sector banks, the majority stake is held by the Centre. As per the Banking Companies (Acquisition & Transfer of Undertakings) Act, the central government holding in public-sector banks cannot drop below 51%.
Political parties and civil society in J&K are also concerned for the fact that J&K Bank was not a loss-making bank like some other bank that have been merged with the SBI.
Among J&K state’s 10 PSUs, out of 30, that earned profit, J&K Bank accounted for Rs 416 crore (50% of the total profits of all PSUs), according to the CAG report of 2016-17. It has a record for posting uninterrupted profits.
J&K Bank is also a big job provider in the state.
This is a developing story. More updates shall follow as and when available.