November 2016 News

Kashmir Unrest: Around 2 Lakh Loan Accounts 'stressed'

10 November 2016
Greater Kashmir
Mukeet Akmali

Srinagar: In a disturbing fiscal situation, continuous shutdown and frequent curfews resulting in stoppage of economic activities in Kashmir for the past four months have turned around 2 lakh loan accounts into Non-Performing Assets (NPAs) following the borrowers' inability to pay Equated Monthly Installments (EMIs) on time. The grim fiscal situation has created panic among stakeholders who are now asking banks to restructure their loan accounts. As per bank executives, the continuous lockdown for over four months has turned Rs 5000 crore loan amount into 'stressed loans' for financial institutions in Kashmir, of which major brunt is being faced by state's premier financial institution, Jammu and Kashmir Bank. To mention, NPAs refer to loans that are in jeopardy of default. Once the borrower fails to make interest or principal payments for 90 days the loan is considered to be a non-performing asset. 'Due to lockdown, banks in Kashmir are also facing the brunt of ongoing unrest as per estimates over 2 lakh loan accounts have failed to pay EMIs over period of three months which has turned them into stressed loans, that is a cause of concern for bank,' informed a senior bank executive, stating that the only breather can come from Union Finance Ministry which can pass on directions to Reserve Bank of India to give permission to banks in Kashmir to restructure loan accounts. Talking to Greater Kashmir, CEO and Chairman J&K Bank, Parvez Ahmad, said 'JK Bank has already moved an application to RBI for restructuring of loans which is under their active consideration.' J&K Bank is already facing mounting NPA ration, the bank in Q4 has showed Rs 56.02 crore loss quarter ended March 2016. In the last more than three decades it is for the first time that the bank registered the loss. The total income of the bank decreased to Rs 1,805.33 crore in the three-month period (Q4) as against Rs 2,023.50 crore in the year-ago period. Commenting on the issue, Finance Minister Dr. HaseebDrabu said: 'State government has nothing to do with restructuring of loans, it is SLBC which will approach the concerned quarters. NPAs in bank are not only because of current unrest but also due to past legacy of banks.' Meanwhile stakeholders in Kashmir have urged JK government to take active part in safeguarding the interests of both - banks and borrowers - in Kashmir who are under financial distress. President, Kashmir Chamber of Commerce and Industry, Mushtaq Ahmad Wani said that business community is worried due to inability to repay loans which has turned many loan accounts into NPAs. 'JK government should take lead and take up the issue with Union Finance Ministry to safeguard both banks' interest and borrowers,' Wani said adding that the restructuring of loans is the need of the hour. 'Due to the prevailing situation it has become impossible for genuine bank borrowers to pay EMIs,' he said adding that the chamber is seeking restructuring of loans for genuine customers not for chronic defaulters. Chairman, Kashmir Economic Alliance, Muhammad Yaseen Khan said that major brunt of this situation is being faced by JK Bank. 'JK Bank is our premier financial institution, we want it to flourish as it is our pride and the current situation has affected it also as most of the lending in Kashmir is done by the JK Bank,' Khan said, adding that the government which is major stakeholder in the bank should take up the issue of restructuring of loans with the union government keeping in view the prevailing situation.