Raises concerns over ‘intimidation’ of borrowers, calls for compliance with Supreme Court, RBI guidelines
SRINAGAR: The Federation of Chambers of Industries Kashmir (FCIK) has appealed to Chief Minister Omar Abdullah for urgent intervention to “safeguard” hundreds of struggling businesses, particularly Micro, Small, and Medium Enterprises (MSMEs), from the “stringent” recovery measures imposed by J&K Bank.
In a letter to the Chief Minister, FCIK expressed concerns over the bank’s “aggressive” tactics, which have reportedly intimidated and harassed local borrowers. “These actions have intensified since the establishment of the popular government in the Union Territory, particularly following recent orders obtained from the Chief Judicial Magistrate that allow the forfeiture of mortgaged properties, including residential homes, under the strict provisions of the SAFAESI Act,” the chamber claimed in a statement issued here.
FCIK informed the Chief Minister that “J&K Bank has consistently ignored the Centre’s directives outlined in the May 29, 2015 notification regarding the ‘Framework for Revival and Rehabilitation of MSMEs’ as well as subsequent directions from the Reserve Bank of India (RBI) in 2016”.
These guidelines emphasize the need to identify potential sickness for MSMEs before classifying them as Non-Performing Assets (NPAs). Alarmingly, the bank has also disregarded recent Supreme Court orders, it said.
“The Hon’ble Supreme Court of India, on August 1, 2024, reaffirmed that these guidelines have statutory force and are binding on all scheduled commercial banks in India,” FCIK noted in the letter. “The Court explicitly stated that the provisions outlined in the 2015 notification and subsequent guidelines must be adhered to before classifying a borrower’s account as an NPA.”
The chamber highlighted that the recent orders for property forfeiture were obtained shortly after the formation of the new government in J&K. They also pointed out an increase in the intimidation of borrowers through various media channels, despite the bank’s longstanding pattern of harassing local borrowers under the guise of adhering to Standard Operating Procedures (SOPs).
“It is crucial to investigate whether the concerned CJMs were made aware of the Supreme Court ruling of August 2024 when these possession orders were obtained,” FCIK observed.
FCIK has called on the government to urge J&K Bank to reassess its classification of NPAs among MSMEs in accordance with the Government of India’s notification and the RBI guidelines. They have also requested discussions aimed at reviving viable units as soon as possible.
The chamber seeks the Chief Minister’s support in halting all actions by the bank, including public notices, e-auctions, and property forfeiture, until a resolution is achieved. FCIK has urged that revenue authorities, in collaboration with District Development Commissioners, ensure banks comply with the mandatory orders and guidelines set by the Union Government and the RBI prior to obtaining forfeiture orders from the respective Chief Judicial Magistrates.
Meanwhile, FCIK said it hopes to expand the scope of the High-Level Committee established by the UT Government under Order No: 940-JK (GAD) of 2024, dated April 8, 2024, to address these critical issues and explore necessary remedial measures, including a special uniform One Time Settlement Scheme. They have proposed that the President of FCIK be included as a stakeholder in this committee to ensure the interests of local businesses are adequately represented.