Does bringing the J&K Bank under the purview of RTI for making its functioning transparent and turning it into a Public Sector Undertaking (PSU) amount to an attack on the special status of Jammu and Kashmir that is provided under the Article 370?
This is what some political parties in Kashmir are trying to project after Governor Satya Pal Malik in a bid to streamline functioning of the “old private” bank ordered turning it into a PSU and also brought it under the radar of RTI and Comptroller and Auditor General of India (CAG). The issue has become a hot topic of debate in Jammu and Kashmir.
The 80-year-old bank is surviving on the huge amount of funds pumped into it from time to time by the state government. The J&K Government not only holds nearly 60 per cent of its stake but also a few months ago granted a hefty amount of Rs 532 crore to the bank that was facing financial turmoil.
The bank has faced allegations of nepotism on the issue of “recruitment” of wards of influential people and the matter also came up during the sittings of the legislature.
There were allegations that during natural calamities the management of the bank was friendlier towards orchardists and farmers of Kashmir valley, but such initiatives were lacking in Jammu.
The Reserve Bank of India a few days ago imposed a penalty of Rs 3 crore on the J&K Bank for not complying with certain banking norms. The PDP organised a protest march in Srinagar on Thursday against the step taken by the Governor and demanded a rollback on the issue. The National Conference and various other parties have opposed the move of the Governor. However, the step has been widely appreciated in the Jammu division.
Mehbooba Mufti, who till recently was chief minister with the support of BJP, is most vocal on the issue and she has gone to the extent of telling Finance Minister Arun Jaitley that the step of the Governor would cause further alienation in Jammu and Kashmir. She described it as an “intrusive and regressive move”.
BJP spokesman Brigadier Anil Gupta (Retd) has alleged that there is a deliberate attempt by “vested interests in Kashmir” to oppose the decision of the State Administrative Council (SAC) to convert J&K Bank into a PSU, protests and statements to arouse public sentiments have failed since the decision has been welcomed by the vast majority of people across the state.
Gupta said the bank has been under a cloud for rising non-performing assets (NPAs), backdoor appointments, misuse of corporate social responsibility (CSR), undue favours and lack of transparency. There were reports of influential people defaulting in repayment of huge amounts of loans taken from the bank.
Moreover, the state government has all these years indulged in virtual spoonfeeding of the bank by transferring salaries of more than 5 lakh employees and pensioners into the bank. There are complaints that people and students are forced to make payments to government, universities and other organisations through bank drafts of the J&K Bank.
Electricity bills can be paid online only by those having an account in the J&K Bank, allege electric consumers. Those making physical payment have also to stand in queue at the J&K Bank branches to pay electricity bills as online payment facility has not been extended to other banks.
Reacting to the opposition to the step taken by him, Governor Malik said that “people with personal or political interests were opposing his move”. “There was no merit in their opposition, he said.
The J&K Bank was founded on 1 October 1938, under letters patent issued by the then Maharaja of Jammu and Kashmir, Maharaja Hari Singh. The Maharaja had invited eminent investors to become the founding directors and shareholders of the bank. The most notable among who were Pandit Sriniwas Magotra, Abdul Aziz Mantoo, Pestonjee and the Bhaghat Family, all of whom acquired major shareholdings.
The bank commenced banking business on 4 July 1939, and was considered the first of its nature and composition as a state-owned bank in the country. The bank was established as a semi-state bank with participation in capital by state and the public under the control of the state government. In 1971, the bank had acquired the status of a scheduled bank and was declared as an “A” Class bank by the Reserve Bank of India in 1976.
The full bench of the State Information Commission had in April 2012 declared the bank a Public Authority as defined in Section 2 of the State Right to Information Act. However, successive governments did not implement the directions that would have introduced transparency in functioning of the bank.