SRINAGAR: Will Governor Satya Pal’s order to bring J&K Bank, a premier profit-making institution of the state, under the control of the state assembly as a Public Sector Undertaking (PSU), which is accountable to the Chief Vigilance Commission (CVC) and answerable under Right to Information (RTI), help the bank or harm it? The latter is likely to happen, says former J&K Finance Minister Abdul Rahim Rather.
Talking to Kashmir Reader, Rather said that political interference in the bank’s management will be “suicidal”.
“In no way will the new order do any good to the institution that has been autonomously functioning since 1938. The order is uncalled for,” he said. “I don’t rule out any corrections being made to the bank by the intervention of the government, but they can be done outside the order as well. I don’t see any positive impact of the order. Instead, it is the first step in the making of another defunct PSU.”
J&K Bank is the only listed company from the state on the stock exchange. It has a current business of Rs 1,36,919 crore, with the majority of its shares belonging to the state of J&K. The bank is an exception in the Indian federal structure where all nationalised banks are under government control.
All the decisions of J&K Bank are taken by its board of directors and its chairman. They are accountable to the Reserve Bank of India, the Comptroller and Auditor General (CAG), and the bank’s own internal audits.
Now the order has made the directors and chairman accountable to legislators, and other government bodies, adding to the list of hierarchies for permission and accountability. It won’t help in any way, opines Rather.
Rather is also sceptical about the Governor’s statement that this new order will not affect the governance structure of the bank. He said that there can be no guarantee of this, as the order has opened up ways for the government to intervene.
“When power comes in their hands, things will change,” he said, but added that if the present government does not roll back the order, “an elected government can undo it.”
“But the question is why the decision was taken in the first place?” he asked.
One of the top functionaries of the bank told Kashmir Reader that the decision will hugely affect the bank’s powers to take decisions for its welfare. He quoted an instance when the bank had bailed out some of its nonperforming assets. The bank had decided to recover the loan amount by one-time settlement, a decision taken by the Board of Directors only.
“For the last six quarters, the bank has seen gradual success. I don’t think the bank could have recovered had it been under the (new) proposed structure, which allows a non-professional to call the shots in decision making,” he said.
The official cited the example of the struggling PSU, State Road Transport Corporation (SRTC), which at one time used to finance the Power Development Department (PDD), but which today cannot even recover its own operating costs.