Srinagar, Feb 5: The associated Chamber of Commerce & Industries Kashmir (CCIK) has flayed the government for spurning J&K Bank and switching to Reserve Bank of India (RBI) for overdraft.
 “The arguments of financial indiscipline & high interest rates charged by J&K Bank, as put forward in defence by the government, are specious. Firstly, financial indiscipline cannot be contained merely by changing bankers. The culture of financial discipline and accountability has to be inculcated in the persons manning the political and executive positions in the state and not in the banks which are there only to obey the instructions.” “Secondly, the argument of high interest rates charged by J&K Bank is equally frivolous in view of the fact that J&K government is a majority shareholder and practically the owner of the bank. In effect the state government is accusing itself of charging high rates on overdraft facilities it enjoys from the bank.” “Looking at it from another way, any extra profit earned by bank due to overcharging comes back to the state government in the form of dividends and accumulated profits,” it said in a statement. Far from securing the interests of this premier institution, the move has negative repercussions vis-à-vis   bank.
 “Firstly, it will be deprived of the assured interest income of around Rs 250 crores. Secondly, it will be left struggling with an excess liquidity of Rs 2300 crores, which by any stretch of imagination is difficult to be absorbed by the local economy in the present circumstances. That means the bank will have to tap outside markets, exposing its fund bag to higher risks.”

Lastupdate on : Sat, 5 Feb 2011 21:30:00 Makkah time
Lastupdate on : Sat, 5 Feb 2011 18:30:00 GMT
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