Srinagar: Government interference in J&K Bank has ruined the premier institution’s financial health, with losses mounting and earnings plummeting on every front in the last fiscal. The government has in the past couple of years been constantly undermining the bank’s autonomy and increasing the state’s control over it. The bank has been brought under purview of Right to Information (RTI) and the Chief Vigilance Commission (CVC), in the name of bringing transparency and accountability. The Anti-Corruption Bureau (ACB) has also been hounding the bank with several cases of corruption under investigation. The bank’s chairman and CEO Parvez Ahmad was summarily removed on charges of misgovernance and the government appointed RK Chibber in his place. All this was done in the name of improving the bank’s functioning and financial health.
But the bank’s financial report for the last financial year shows not even the slightest sign of any improvement. Instead, the bank is sinking into losses.
According to the J&K Bank’s report for FY 2919-20, a loss of Rs 1,100 crore was registered in the year. Much of this was due to the government’s actions, as the Kashmir economy was mostly shut due to the lockdown imposed after abrogation of Article 370 in the first week of August 2019.
Last year, J&K Bank only had four full business months, from April to July. From August onwards the bank was completely shut till December. In January 2020, the economy started to work again, but was thwarted by the corona lockdown. Even during this period, as per the bank’s report, the losses were far more than the profit.
The close to Rs 25,000 crore losses that the Kashmir economy has suffered since August, according to industry estimates, has heavily eaten into the debt owed to J&K Bank.
“The total income in the fourth quarter fell 7.9% to Rs 2,277 crore from Rs 2,473.47 crore in the same period last year,” the report says.
“Net profit per branch too has fallen into negative territory where it has fallen from 0.49 crore to -1.19 crore. Net profit per employee in FY 2019-20 is down to -9.03 lacs from 3.69 lacs of 2018-19,” it says.
The bank has been unable to earn from its shares as well. Per share profit from Rs 8.35 has dropped to a loss of -Rs 15.97, so has the book value share, which has dropped by Rs 33 per share.
Such all-round losses have had a severe and adverse impact on the financial health of the bank.
The J&K Bank had to spend more money on generating income in the last fiscal. Cost to Income Ratio stood at 65.52% for the quarter ended March 2020 as compared to 55.01% for the quarter ended March 2019. This means that expenditure increased by 10 percent despite cost-cutting done by the bank.
The bank has also performed negatively in terms of generating profit from its assets, which can either be due to non-realisation of money as the assets are still listed as active. Return on assets is reported to have crashed from 8% of 2018-19 to -20% in the FY 2019-20.
The perennial problem of non-performing assets (NPAs) is also growing, from 9% to 11% in the last fiscal. The paralysed economy, failure of businesses, and loans given without mortgages are some of the reasons why this has happened.
Other income of the bank has decreased from Rs 813 crore in 2108-19 to Rs 546 crore in 2109-20.
J&K Bank Chairman RK Chibber was not available for his comments on this financial report of the bank.

Reader correspondent