The JK Bank Debate

A new debate has been generated around the role of the J and K Bank in the state’s economy after a prominent UK-based economist recently questioned its privatization. Over the past many years, the Jammu and Kashmir government has slowly but studiedly diluted its stake in the Bank, giving a free hand to private members of its board of directors, with major shareholdings, to decide policy and govern its affairs.

Being subservient to these shareholders, the management has been devising policies to make the Bank more suited to the business interests of private board members and shareholders than the people of the state, whom it had been created to serve – with a clear advantage of not only handling all government transactions but also being the preferred bank of the state’s masses. With almost no competition, more than 70 per cent of deposits in Jammu and Kashmir land in this bank.

And still, the Bank’s prefers credit dispensation for Corporate India rather than local business and infrastructure.  For every Rs 100 deposited with it locally, the Bank lends Rs 60 out of the state. With such a poor credit-deposit ratio – a massive capital flight – Jammu and Kashmir’s economic health receives a big blow.

In this backdrop, and in view of the post-flood crisis situation, Merajuddin Mattoo, a renowned economist and a son of the soil who, besides being an investment banker, has also served as advisor to a number of governments in Southeast Asia and the Middle East, has advised the state government to take the Bank back under its complete control.

Mattoo has based his argument on his experience in countries like China, where nationalised banks, both at federal and provincial levels, have turned the country into an economic pivot of the world, created employment, and brought about unprecedented poverty reduction, with abundant credit flow.

With Kashmir’s economy going through a crisis, the business community, political parties soon going into elections, and civil society, need to focus on the role of the J and K Bank and shifting its priorities towards the economic will of the people.

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