November 2016 News

2016 Unrest: RBI Declines Restructuring Loans

16 November 2016
Rising Kashmir

Srinagar: The Reserve Bank of India (RBI) has declined the request of various banks of Jammu Kashmir of rescheduling or restructuring of stressed loans of Kashmiris hit by the ongoing uprising. According to sources, RBI vide its letter No 342-03 01 17-2016-17 dated November 15, 2016 regarding relief measures in areas affected by riots and disturbances in J&K state advised that in terms of their Master Directions on Natural Calamities 2016 dated July 1, 2016 only genuine persons duly identified by the State administration as having been affected by the riots or disturbances were provided assistance. 'In light of our circular, it is imperative that the areas and people affected are identified to consider for the special dispensation,' the RBI letter reads. It mentions that as the district collectors, the State government has not yet declared any area as affected by riots or disturbances. The letter reads that the special dispensation required by J&K Bank, which is the Convenor of the State Level Bankers Committee, J&K state does not fall under the RBI circular. Earlier, the CEO and Chairman J&K Bank, Parvez Ahmad had confirmed that the restructuring of the stressed loan had been taken up with the concerned quarters. 'I clarify that restructuring does not mean waiving off the loan amount but issue regarding rescheduling of EMIs with moratorium period shall be looked into,' he said. According to rough estimate, the business community in Kashmir has faced a loss of Rs 20,000 crores which directly has left the business community in a state of bother. J&K Bank, the frontrunner of financial institutions of the State, is facing a huge liability of Non Performing Assets (NPAs) within and outside the State as per the balance sheet brought into the public domain. Rating agency CRISIL has downgraded ratings for J&K Bank's fixed deposits from 'AA' to 'AA-' on increase in the stress on its advances in the State and its consequent impact on profitability. It also placed ratings on 'Watch with Negative Implications'. The pressure on asset quality has been compounded by the increase in stress in the advances given to small and medium-sized enterprises (SMEs), Micro, Small and Medium Enterprises (MSMEs) and corporates within certain regions of Jammu Kashmir. This was in addition to the continued slippages from its large ticket corporate book, CRISIL said. Gross Non Performing Assets (NPAs) increased significantly to 9.3 percent as on June 30, 2016 from 6 percent as on March 31, 2015, primarily driven by slippages in its large loans in corporate book. The weak assets are expected to sharply increase to around 15 percent by March 2017 from 11.3 percent as on June 30, 2016.