Degenerating into perfidy

In response to Mushtaq Sidiqi's article on SARFEASI Act



Apropos Mushtaq Sidiqi’s article that appeared in the GK on 27th May, 2013.
It has extensively referred to me, less so to the article I had written on the enforcement of SARFEASI Act in J&K. The only point that I could find in the Sidiqi’s article is an accusation that I “introduced” SARFEASI in the SLBC and “vociferously pursued its application to the state”, thereby casting aspersions on my intellectual integrity.
I must admit I had no recollection of the SLBC meeting referred to. Mr Sidiqi, I must say has a better memory than I do, even if it is selective and contaminated by a grudge.
I checked up the minutes of the meeting and these are reproduced below, verbatim.  For the record I chaired the meeting.
Item: Legislating SARFASIE Act.
The Chairman reminded the house that for a variety of reasons the SARFASIE Act does not apply to the J&K State and that it has been questioned and is sub-judice, which has had an adverse impact on the lending and recovery of all the banks.
He stated that in earlier meetings it had been decided that J&K State should have an act of its own on the lines of SARFASIE Act and the J&K Bank was supposed to prepare a draft legislation, which has already been forwarded to the Government for consideration.
He requested the government to update the house with the latest status in the matter. Reacting to this, the Commissioner/ Secretary Finance, Mr. Sudhahshu Panday informed that the draft legislation prepared by J&K Bank has been examined and certain suggestions have been made for improvement regarding which comments of J&K Bank have also been sought. He assured that government would introduce the bill in the State legislature in the next session.
(Page 6 Minutes of the 75the meeting of the J&K State level Bankers Committee(SLBC) held on April 22nd, 2009 at Jammu).
Apart from the trivia that Mr Sidiqi is misrepresenting facts, the minutes clearly show that my views on this subject haven’t changed; this being the main allegation made by Sidiqi against me in his article. 
As is obvious from the minutes of the meeting, I reminded the house then and I continue to remind them now, in different capacities, that “applying the SARFEASI Act to J&K”, is not the correct and Constitutional thing to do. The article that I wrote in GK was written in response to the RBI Governor’s statement that the Chief Minister had assured him to make SARFAESAI applicable to J&K through an ordinance.
Going beyond these minutiae, two substantive things are evident from the minutes of the meeting:
First, a recovery mechanism is needed for commercial lending institutions. I have dwelled at length in my article on how we can do that without applying the pan India SARFEASI Act. I had earlier proposed J&K’s own SARFEASI type of an act and got the J&K Bank to work on it.
Along similar lines, as Economic Advisor to the Government of J&K, I had recommended against the extension of the Service Tax and suggested to have our own services tax. As a matter of principle, one should not trade the power to raise resources with the right to share revenues. Similarly, the need for a recovery framework is not in doubt, the motivation and mechanism is.  Better to draft our own than apply a borrowed one without thinking it through.
Second, if indeed as Sidiqi says “State Government team had (reached) with the Union Law and Finance Ministries…..a complete unanimity on bringing specific changes in the Central Act to make provisions on sale, take over etc of mortgaged assets in a manner that such provision in the Act stays in tandem with the State land laws to avoid any dilution of the State’s special status position”, how come it has not been brought to the legislature till now.
Four years have passed since Mr Sudhanshu Pandey, then the finance secretary and Sidiqi’s boss, made a commitment to send to the legislature own law, there is no sight of the grand consensus document that Sidiqi “worked whole heartedly” on? How long are the lenders and the borrowers to wait for the finance bureaucracy to put up the proposal? Perhaps Sidiqi has since retired and many more will go his way but the finance department will continue their pen pushing ways!  Or perhaps, their politically compliant methods.
It is not raising such issue that “foments political unrest” as Sidiqi thinks. It is the ignorance and servility of Governments leading to political disempowerment and economic deprivation that causes political radicalisation.
It is because of the serf like mentality of people like Sidiq that J&K’s well laid out autonomous status with the Indian Union has been eroded.
I am shocked that Sidiqi, who masquerades as a finance man within the confines of the secretariat, finds the unique position that J&K Bank’s had as “ironic”.
It was a system and a structure that was ideal not only for meeting the developmental needs of J&K but also for the aspirational political structure of autonomy of J&K.  
J&K Bank was a lender of last resort is an institution willing to extend credit when no one else will. The support that this aspect of J&K Bank gave to the Government and the system is immeasurable. Government’s own bank was its lender of last resort. It was tantamount to having its own Central Bank, like the Government of India has RBI. J&K Bank was a quasi-sovereign institution that did pretty much everything that a Central Bank does except print currency. It was an institution of autonomy.
As the Chairman J&K Bank, I signed a revised MoU with the Government of J&K in 2008 represented by the Chief Secretary, S S Kapoor. It had been bilaterally agreed between the Government of J&K and the JKB that JKB would be the debt manager for the state. Besides, addressing issue like netting of the overdraft and making the interest rate on overdraft market driven (Sidiq refers to these two points in his article), it was done to pave the way for making sub national institutions, like the JKB stronger.
It is the empowerment of local institution and individuals that is required to fulfill the developmental needs and meet the political aspiration of the people at large.

Lastupdate on : Tue, 28 May 2013 21:30:00 Makkah time
Lastupdate on : Tue, 28 May 2013 18:30:00 GMT
Lastupdate on : Wed, 29 May 2013 00:00:00 IST

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