Governor Stirs Controversy Over Decision To Turn J&K Bank Into PSU

The move has created a political storm with all regional parties and trade bodies across J&K insisting that the governor revoke the order. Raising concern over 바카라�politicising the autonomy of J&K Bank바카라�, the Jammu Chamber of Commerce and Industry as well as the Kashmir Chamber of Commerce and Industry have asked the governor to review the decision.

Inside the bank바카라�s corporate HQ, officers are worried about the consequences of the decision. They fear government control would turn the bank into an entity like any other state PSU, most of which are running losses due to alleged political and bureaucratic interference. 바카라�Bring the bank under the ambit of the Right to Information Act by all means, but changing its character and making it a PSU is fraught with danger,바카라� says an official.

However, bank officials concede that public outcry over recruitments to the bank during the terms of the NC-Congress and the PDP-BJP governments did somewhat mar its reputation. The alleged backdoor recruitments and mismanagement at the top, coupled with the overall economic situation, res­ulted in bad loans and, in 2016, for the first time in its 80 years, the bank posted losses. The governor alleged that the current bank administration exposed the chinks in the armour by pandering to powerful politicians in the matter of hiring, giving himself enough room to change the bank into a PSU. That didn바카라�t go down well with the parties, which say some cases of alleged backdoor appointments have been used as a ruse to rob the bank of its autonomy.

바카라�I unambiguously reject the changes,바카라� says Peoples Conference chairman Sajjad Gani Lone. 바카라�The bank needs to be made bereft of government control, not drowned in it. This is literally the sole lending institution and lending decisions should be commercial decisions outside the ambit of politics.바카라�

Urging the governor-led administration to restrict itself to basic governance, 바카라�which they are mandated to do, but are, incidentally, not doing바카라�, Lone says structural changes pertaining to the bank are not acceptable. 바카라�Please don바카라�t invent new problems바카라�바카라�that바카라�s his message to the governor, who has come under severe criticism for taking a decision that the regional parties insist is the prerogative of an elected government.

Former CM Farooq Abdullah of the NC calls it 바카라�highly unb­ecoming of the governor administration to fiddle with our institutions when a popularly elected government is not in place바카라�. 바카라�The SAC바카라�s onslaught on the prime financial institution of our state, the J&K Bank, is a case in point,바카라� he says, asking for a rollback of the SAC decision.

For her part, the PDP바카라�s Mehbooba Mufti, who was CM in the PDP-BJP government that went out of power when the national party withdrew support this June, opening the way for governor바카라�s rule, accuses the new adm­inistration of plunging J&K into crisis after crisis. She says the governor is issuing orders that would only fuel the crises in the conflict-hit state.

The J&K Bank, an old-generation private-sector bank with a  workforce of 14,000, is the only bank in the country with a state government holding the majority stake (59.3 per cent). It has 15 million accounts of 11 million account-holders. Coming under the RBI바카라�s regulatory purview and supervision, it is the only private bank designated as the central bank바카라�s agent for carrying out banking business for the state government.

Despite having the J&K government as the major shareholder, the bank was fairly out of its control. The government바카라�s role is limited to appointment of a few directors and nomination of the chairman to the RBI. The finance secretary, who otherwise is the topmost finance man in the state, is just any other director on the board of the bank, which is headed by the chairman. Making it a PSU can change all that. The government can app­oint any official as the managing director, who would be subordinate to the finance secretary. For all major decisions, the bank shall have to seek approvals from the finance department. And like it is for other PSUs, the bank CEO would have to seek permission from the finance department even to move outside the state for normal business. 바카라�In a nutshell, the bank바카라�s operational autonomy will be fairly curbed, which can put a spanner in its growth,바카라� argues a senior official.

Former finance minister Haseeb Drabu is furious. He accuses the government of downgrading the bank by turning it into an entity on a par with any other state PSU such as the J&K State Road Transport Corporation. He says the bank is supervised by the RBI and audited by the CAG, besides having internal auditors. Now that it has been declared a state PSU, the legislature and other bodies of the government would be interfering in its decision-making, Drabu believes.

바카라�The bank will have to submit its annual report to the legislature like all state PSUs must, but commercial banks owned by the government of India don바카라�t have to submit their annual reports to Parl­iament! Where is this coming from?바카라� asks Drabu. 바카라�What makes it unacceptable is that it is done by an administration that is neither elected by the people nor acc­ountable to them.바카라�

A former MD of a PSU tells Outlook that pol­itical and bureaucratic interference will erode the bank바카라�s system, on the lines of what바카라�s happened with the other PSUs. 바카라�Take the State Finance Cor­po­ra­tion. It has had a negative net worth for years because of mounting losses and NPAs. All efforts of recapitalisation have gone in vain. Political interference has resulted in a situation where almost 90 of its 160 emp­loyees are Class IV emp­loyees,바카라� says the ex-official, who doesn바카라�t wish to be named.

Dismissing the perception about J&K Bank bailing out people during the unr­est in 2008, 2010 and 2016 by keeping its branches open as 바카라�simplistic analysis바카라�, the former MD explains, 바카라�Many factors are responsible for the resi­lience of the people. For exa­mple, the state has alw­ays had a large cash-to-deposit ratio, which helps people tide over long periods of strikes. The fairly large number of government employees, the salaried class, is another reason. Strikes don바카라�t affect salaries. Also, most of the spending that keeps the economy running comes from the government itself. That money circulates. And the apple economy is largely unaffected by strikes.바카라�

And when an unmoved governor Malik told reporters that only people having 바카라�personal or political interests바카라� in J&K Bank are opposing the move, Drabu minced no words: 바카라�Of course, I have a personal interest in J&K Bank. We have emotional equity in it. Your (governor바카라�s) decision is against the state바카라�s economic interest, and that바카라�s against my political interests. Neither is mala fide. Wish one could say the same about your (governor바카라�s) decisions.바카라�

After the protests and threats of an agi­tation by political parties, the governor met the bank employees on Tuesday and said, 바카라�In view of the concerns expressed, and to give comfort to employees, the government will ­re-examine the issue of accountability to the legislature.바카라� As of now, the parties seem pleased to have forced a rethink.

***

• Regional parties say the decision to turn the J&K Bank into a PSU should not have been taken when there is no elected legislature.

• 바카라�The J&K Bank바카라�s operational autonomy will be fairly curbed, which can put a spanner in its growth,바카라�says a senior bank official.

• Post-protests, the governor told bank ­employees that the issue of accountability to the legislature will be 바카라�re-examined바카라�.

By Naseer Ganai in Srinagar