Finance Minister Dr Haseeb Drabu said he was at pain to inform that there have been some serious lapses in corporate governance and management failures over the last few years in Jammu and Kashmir Bank.
“As a promoter of the bank, we did make some efforts in the last two years to sort out the issues of asset quality without impairing the autonomy of the bank,” he said.
“With a change in the top management and the board, the reality has now surfaced. The bank has declared NPAs of Rs 6,000 crore. There is also a significant under-provisioning of impaired assets,” he added.
The Minister said as a result the bank has had to declare a loss of Rs 600 crore for the quarter ended September 2016-17.
“To help the bank, I’m making an equity infusion of Rs 532 crore in two tranches. This will help in not only maintaining the required capital adequacy but also in financing new asset growth,” he said.
The Minister said there was governance failure and management failure and a new management has been put in place.
J&K Bank Chairman and CEO Parvez Ahmed has welcomed the Government decision to infuse Rs 532 crore in J&K Bank.
“I’m happy to report that we completed the formalities for incorporating the J&K Asset Reconstruction Company in partnership with the J&K Bank. The State Government is a majority shareholder while the bank holds 49 per cent,” he said.
“There are still some issues to be resolved with regard to CGST and IGST for all states”, he said.
“As for J&K, the proposed GST law is not applicable to J&K. We will have to work out in what form it can be applied…Central Excise and Central Sales Tax, which will be replaced by the CGST and IGST respectively, already are applicable but only to goods and not services. As regards SGST we will formulate our own law and bring it to the Legislature”, he said.
The Minister said till such time, Government proposes exemption on commodities like paddy, rice, wheat, pulses, flour. VAT remission to the local industry is proposed.