Govt’s OD remittance of Rs 2600 Cr being advanced in local priority sector

JK Bank’s March 2013 target: Rs 100,000 Cr business, Rs 1000 Cr profit

Ahmed Ali Fayyaz

SRINAGAR, May 25: Chairman of Jammu & Kashmir Bank Ltd, Mushtaq Ahmed, today declared that entire amount of Rs 2600 Cr, that had been lately remitted by Government of Jammu & Kashmir to liquidate its cumulative overdraft, was being advanced in the local priority sector in the state. Describing all fundamentals and portfolios of the bank as strong and stable, he asserted that target of the annual business of Rs 100,000 Cr and profit of Rs 1000 Cr would be achieved by March 2013.

Addressing his maiden news conference after taking over as Chairman and CEO of J&K Bank in October last year, Mushtaq Ahmed asserted that all negative impressions created over termination of the bank’s OD facility with the state government, coupled with Government’s MOU with Reserve Bank of India, were “unfounded”.

“There will a positive impact on the functioning of Bank. The arrangement has, in fact, enabled the bank to ensure the regulatory compliance, which will further help us realize our expansion plan. Moreover, the capital parked with government as OD will be deployed into the priority sector within the state”, he said. “It’s a completely win-win situation for J&K Bank, RBI as well as J&K Government”, he added. He said that it was mainly due to the fast swelling volume of OD that the bank had been receiving snubs from the regulator and the Government, in turn, from the bank.

After clearing the bottlenecks through proper regulatory compliance, the Bank has embarked on an ambitious expansion plan whereby scores of new Business Units and ATMs would be established particularly within the state. Employment generation, direct by recruitment and indirect through the disbursement of finances to entrepreneurs, will be the thrust area of J&K Bank’s multi-pronged strategy this year, he said. He said that the bank would achieve the target of having 600 branches and 600 ATMs by March 31, 2012.

Promotion of the idea of Self-employment would be at the center of this strategy.  To encourage the idea of self-reliance and entrepreneurship we shall follow through all the cases and will counsel, guide the entrepreneurs all along, he added.

In this regard, the bank sees the Seed Capital Fund Scheme as potential means to promote the new enterprise ethos among the youth of this state, he added. Dwelling in detail upon the Bank’s achievements and ambitions, the Chairman said, “I feel proud to say that J&K Bank is numero uno in provision coverage ratio in the country and our performance is outstanding among old private sector banks”.

He said that empowerment of the people through economic well-being had been the mission of J&K Bank. The policies and plans of the Bank, he said, were aimed at socio-economic development of the J&K State through active participation in employment generation and poverty alleviation programmes. Consequently, a silent economic transformation was steadily taking place across the state.

Credit and Deposit Growth FY 11.

According to Chairman, net advances  of the Bank have grown to Rs 26,193.64 Cr as on March 11^th  from Rs 23,057.23 Cr a year ago, thereby growing at the rate of 14 %. In real terms the loan book has registered growth of around 24% as the Government of Jammu and Kashmir adjusted overdraft facility of `2300 crore in March 2011.  The Deposits grew by 20% to reach at Rs 44676 Cr, registering growth of 20% in comparison to Rs 37,237 Cr as on March 31, 2010.

Mushtaq Ahmad said: “The branch network both within and outside J&K is being suitably expanded with a view to strengthening and consolidating our position and reach. During the FY 2010-11 the Bank opened 16 new branches, thereby increasing the network of the branches to 548 in addition to 35 extension counters and 3 mobile branches. The new branches are opened in under banked rural areas of J&K State for providing basic banking facilities to unbanked population and for ensuring presence of the Bank in unrepresented areas outside J&K State. I would like to add here that 94% of the Bank’s branches covering more than 99% of its business are networked under Core Banking Solution (CBS) platform. All CBS branches have been enabled for RTGS & NEFT facilities. Further during the year 73 new ATMs have been commissioned taking the total number of ATMs to 361.”

He said, “To promote and project the idea of self-employment through entrepreneurship in J & K State is the thrust area of the Bank. In this regard we have taken a lead role in operationalising and implementing the Sheri-I-Kashmir Employment & Welfare Programme for Youth (SKEWPY) promoted by the State Government as a mission. As a hand holding measure and to achieve the objective of alternate employment generation the Bank has constituted a task force for monitoring implementation of this scheme as also to counsel and guide the un-employed youth.”

Major Highlights of FY 2010-11 ended March 31, 2011:

·        Net Profit at Rs 615 Cr up by 20% compared to Rs 512 Cr for the FY ended March 31, 2010.

·        Operating profit rose to Rs 1149.49 Cr up by 19.96% compared to Rs 958.20 Cr a year ago.

·        NIMs (Net Interest Margins) expanded to 3.62%, up by 58 bps against 3.04% for the previous FY.

·        Yield on Investments improved to 6.34 % up by 63 bps from 5.71%.

·        Cost of Deposits declined to 5.05% compared to 5.24% a year ago.

·        Low cost Demand & Saving Deposits as on Mar, 2011 at `18087 crore up 19 % from Rs 15,153 Cr a year ago. CASA Ratio was 40.48% as on Mar, 2011 compared to 40.69% last year.

·        Post tax Return on Assets improved to 1.22% from 1.20% for the previous financial year.

·        Post Tax Return on Average Net-Worth improved to 18.96% from 18.19 % recorded for the previous financial year.

·        Capital Adequacy Ratio Basel I and Basel II as on Mar, 2011 at 13.30% and 13.72% respectively.

·        Gross and Net NPA’s as percentages to Gross and Net Advances as on Mar, 2011 at 1.95% and 0.20% respectively compared to 1.97% and 0.28% as on Mar, 2010.

·        The Provision Coverage Ratio as on Mar, 2011 at 92.71% (which is much above the RBI stipulated 70%) compared to 90.13 % a year ago.

·        A Dividend of 260% recommended by the Board of Directors of the Bank compared to 220% for FY10.

Goals  for Financial Year 2012

·        The Bank aims to reach an aggregate business figure of Rs 85,000 Cr by 31-03-2012, comprising of deposits of Rs 53,000 Cr and advances of Rs 32,000 Cr.

·        Added thrust on Retail Business, especially retail / CASA deposits and retail advances during FY12.

·        Expanding the delivery channels, the Bank plans:

·        To increase the number of business units from 548 to 600

·        To take the ATM strength from 361 to 600 by March 2012.

·        All business units are planned to be rolled over on Core Banking Solution (CBS) platform.

END