Building a brand is a time consuming process. Among the various things that go into building a brand, be it a consumer product, apparel or even a financial institution, one thing is of vital importance: Building trust with the consumers and all stakeholders. Jammu and Kashmir is perhaps the only brand from the State of Jammu and Kashmir which has made its mark throughout India. Over the years, its staff and management have worked hard to create a solid and dependable financial institution. Even during the years of militancy starting in 1990, the Bank did manage to grow, despite continued strikes and curfews in the valley. It was during the years of militancy that the bank started to aggressively expand outside the J & K State.
The bank had marginal presence in some Indian cities in earlier 90s. It had branches in select cities like Delhi, Mumbai, Chennai, Bangalore, Kolkata and Hyderabad. But once it started expanding, it not only increased the number of branches in these cities but also began to open new branches in other cities. Today the Bank is present in almost all regions of India, barring the North East. It was not an easy task to start new branches in Indian cities, given that people need a brand they trust when it comes to handing over their hard earned money. It will be not out of place here to mention that in mid 90s, there was a mushrooming of unregulated NBFCs in India, who promised sky high returns to their depositors. Hundreds of thousands of Indians who trusted these NBFCs with their money were duped by these fly by night operators. Given this context and also the fact J & K Bank is visibly attached to the Sate of J & K, which was witnessing a secessionist movement in the 90s, it was extremely difficult to solicit business and mobilize deposits, which are the bedrock of any bank. But with a dedicated staff and an eager management, the Bank overcame these hurdles and managed to spread its network fast and wide as well.
The Bank which was set up in 1937 is majority owned by the Govt of J & K State. Among the balance share holders, there are Foreign Institutional Investors, Domestic Institutions as well as retail investors. The Bank has shown solid growth over the years, taking its net profit from Rs 115 crore in 2005 to Rs 1182 crore in 2014. The deposits have also shown a three- fold increase in the said period while as the advances have grown more than three times. The stock price of the company has kept pace with the improving financials and touched an all time high of Rs 1995 on the Bombay Stock Exchange on May 16th.
But the companys financial performance has come under some cloud recently, with some reports in a section of the media suggesting that the Bank had concealed bad debts worth Rs 2500 crore. It is a serious indictment of the working of the Bank and if these allegations are true, it will cause a serious dent in the confidence of depositors, investors and all stakeholders in the Bank. The Management should come out with point by point rebuttal of these allegations without wasting any time. In the absence of a valid and believable reply by the Management to these allegations, the Banks reputation and brand will take a serious hit. The stock price has already taken a knock, dropping about 25% from its peak, after these allegations were made. It is time for the Bank Management to take a serious stock of its working and come out clean on these allegations.
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