J&K Bank Woes: New CEO Says, 'Give Me 18 Months'

Srinagar: Current unrest in the Valley has further complicated the financial situation new J&K Bank boss said today and warned that there would not be any bottomline growth in the next 18 months, resulting in "no dividend , no tax provisions and no contribution to the CSR". 

Making no bones about the deep problems that the Bank is facing newly appointed CEO and Chairman Parvez Ahmad said during his maiden interactive press meet at the Corporate Headquarters that the bank’s focus henceforth will be on “consolidation” and  “stability”. “The problems that the bank faced emanated from a high number of Non Performing Assets(NPA’s) and low coverage ratios, ‘ Ahmad said.

Giving context to the high NPA’s, Parvez Ahmad attributed these to the economic slow down and the tough times that the banking industry was facing at the national level. He also attributed the problems to the current unrest in Kashmir. “ Further slippages  are expected in the bank’s loan portfolio. And against the back drop of the current unrest,  there will be no bottom line growth during the current period”. Coverage ratios will come down further and even the bank’s net worth will be affected,’ said Parvez.

Banking industry in India is crippled with huge stress and many have an alarming level NPAs of close to 20 per cent, he said, adding that "ours is also in the range of 9.3 per cent on the basis of numbers as on June 30, 2016". 

Ahmad said the situation has become further complicated on account of the unrest in Jammu and Kashmir. "So, in the given circumstances, we feel that against a profit of Rs 460 crores, which we have registered during the previous financial year, there will be no bottom-line growth during the current fiscal and also this may continue in the second half of next financial year. "There will be no dividend, no tax provisions (and) no contribution to the CSR for the next at least one-and-a-half year," he added. He said however that the bank will focus on recovering bad loans and minimising losses in the next 18 months.

“Given these conditions, the focus of the J&K Bank will be on consolidation and cleaning up of balance sheets”, Parvez added.

“The immediate strategy will be to reduce loan exposures, take legal recourse for loan recovery, settlements between parties and hand over the NPA’s to Asset Reconstruction Companies, “ stated Parvez.

“The growth path will be revised. Vigorous attempts would be made to attain decent Return on Investments(RoI) to investors and the emphasis would be on strengthening balance sheets. This would be complemented by a focus on service and product up-gradation and new product offerings. The Bank would also focus on quality advances, “ added the new CEO cum Chairman of the Bank.

“The overall aim would be to build a platform for growth and fulfill J&K Bank’s Development role,” said Parvez.

 “In addition to making the customer interface more friendly, the bank will be devoted to the economic development of Jammu and Kashmir. Consolidation and stabilization attempts will not hinder these goals, “ added Parvez”.

“Recruitment, given that the Bank is a key employer in the state, will also not be affected, “ added the CEO cum Chairman.

When Kashmir Observer asked the new bank Chairman, how would the J&K Bank ensure the flow of credit to the economy- its life blood in the backdrop of adverse economic environment and political unrest? the chairman said that, “ the bank would ensure a decent flow of credit to the state’s economy in a prudent manner that would then percolate to the real economy, adding to economic growth and development”.

Upon being asked if the new approach amounted to conservative banking, Parvez Ahmad said that, “the bank’s focus and emphasis would, for the moment be upon consolidation and after a certain threshold, focus on growth would resume”

New chairman, however, gave no satisfactory answer to a query from Kashmir Observer whether the bank’s balance sheets would with stand “stress testing”.

Last, without naming anyone or attributing the bank’s problems to legacy issues, nor indulging in blame games, the CEO cum Chairman said, “ Prudence is key. And while there are problems, these are quite manageable”

“Give me a year and a half,” asserted Parvez, in a tone of calm vigor and quiet confidence.

Parvez took over as the new Chairman and CEO of J&K Bank on October 6 after Mushtaq Ahmad retired. He has been an insider in the banks since he joined it as secretary of the Board. Then he rose up the rank and eventually became bank’s first boss who was elevated to the position while in service. 

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