Islamic banking has big scope in J&K: JK Bank chairman

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SRINAGAR: The Jammu and Kashmir Bank chairman Mushtaq Ahmad on Wednesday said there is a huge scope for Islamic banking in the state but the concept needs to be understood in its right perspective and the permission for the facility has to come from the Reserve Bank of India (RBI). 

“I believe there is a huge scope for Islamic banking in the state but it needs to be understood in its right perspective.   It is a regulatory issue and as such permission has to come from the RBI for which the Parliament has to enact law,” the JK Bank chairman observed during an interview. 

He said that as of now, the JK Bank is governed by Banking Regulations Act which deals only with interest bearing banking and regulatory issues.

When asked about the reason behind Bank’s growth that too in a tumultuous situation prevailing in Jammu and Kashmir, the chairman said there are many reasons for the spectacular growth story of the Bank.

Mr Ahmad however, attributed the growth of the Bank to dedicated human resource base and the phenomenal element of trust and confidence of customers, especially those hailing from Jammu and Kashmir, in the bank.

“It is simply exceptional and transcends monetary transactions. They consider it as their own bank, their ambassador and the catalyst of their economic transformation. And, this is precisely what J&K Bank is,” he observed further.

Asked how far the Bank has been able to implement its principle of ‘socially empowering banking’, the chairman JK Bank remarked: “It is not something we claim, it is something we have all along been delivering. Transformation on the ground speaks for our performance on this count. Our focused attention on financial inclusion, entrepreneurship development and special regional economic sectors like Handicrafts, Horticulture and Tourism has been an outstanding contribution to empower people.”

The Apple Project, he said is an example to quote where we have expanded our base and curbed exploitation. “The total credit to grass-root growers has already exceeded Rs.1450 cr. The Bank has also sped-up its financing to the critical support structure like CA stores, which extend shelf-life of apples to 10-12 months, to help and sustain the small apple growers in the process. As part of the project, we have also entered into an agreement with SKUAST-K for providing modern scientific practices to apple growers.”

He added that the Bank also intend to cover the artisans. “And off late, Project Dastkar has been launched and finance to the tune of Rs.500 Cr stands already sanctioned in favour of the artisans and craftsmen involved in various traditional art forms of the J&K. The project is aimed at meeting the financial requirements of the artisans and putting a stop to the exploitation of artisan by traders and commission agents. There is a tremendous response to these initiatives and things have already started improving for the growers and artisans.”

On its plans for providing employment opportunities to the youth of the state in the coming time, the chairman JK Bank said: “We are committed to empower youth of the state economically by creating direct and indirect employment avenues for them. Directly, by absorbing them in the services of the bank, and indirectly through institutionalizing the culture of entrepreneurship.”

He said that while direct employment has a comparatively narrow scope, indirect opportunities are many, diverse and promising. “Entrepreneurship leads to self-reliance and that is what J&K Bank aspires for the state’s youth. We are liberally financing the entrepreneurial ventures both through our customized financial solutions as well as through various government sponsored schemes like the remarkably vital Sher-i-Kashmir Employment & Welfare Programme for Youth (SKEWPY) programme launched by present government. The programme is personally monitored by Hon’ble Chief Minister Mr. Omar Abdullah.”

The chairman welcomed the emergence of privatized banking in Valley, saying the JK Bnak sees it as a positive development, both for the state’s economy and individual financial empowerment. “At J&K Bank, we take it in the spirit of further evolution. From business strategy perspective we are pursuing massive expansion plan and credit off-take to retain our “universal bank” character within the state. The only concern is while encouraging such players the RBI has to ensure level playing between the existing and future players.”

Given the better opportunities available, when asked if there is any possibility for J&K Bank to divest itself from the insurance venture (Metlife) completely? The chairman JK Bank said that the business is all about making right decision at the right time. “Yes, if circumstances arise, market demands that sort of decision and we get a good price on our investment, we can think of taking a call on that.”

The chairman also informed that the bank had Rs 100 crore exposure to the grounded Airlines Kingfisher and it is one of the few lenders to have recovered a bulk (around 90%) of the money by selling the securities. “Though the rest of the amount stands duly provisioned, we are optimistic to get it back. It may take some time.”

Asked about what and where lies the solution of the cross LoC traders who are fast losing interest in their trade because of lack of banking facility? The chairman said: “Bank’s can provide facilities as per the requirements of trade but we need to understand LoC trade is subservient to the political and diplomatic relations between the two countries. In that sense, there is a need to create an atmosphere based on relevant modalities for the cross LoC trade.”

Regarding potential in online banking, the chairman said the same is the future of banking. “The cost efficiencies that online banking brings to the providers and the convenience it provides to the consumers are going to gradually propel this medium as one of the primary channels of banking.  Inevitably, we are witnessing a surge in the number of online banking. However, certain issues with regards to security of this medium and the customer confidence remain which need to be addressed.”

Mr Ahmad remarked that the JK Bank has been consistently growing above the industry averages and we are confident of continuing on similar lines.  “For FY 2013-14, we are targeting a growth of 25% in advances. We have a highly diversified credit portfolio and the projected growth is going to be anchored by most of the constituent segments. In particular, we expect housing, business, medium and small enterprises, agriculture, infrastructural projects and Export oriented business to be the major drivers.” (KNS)

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