Srinagar, Jan 15: Kashmir’s apex industrial organisation, the Federation of Chambers of Industries Kashmir (FCIK) has reiterated its demand for the complete withdrawal of the decision of J&K Bank to levy commitment charges on unutilized portion of the working capital facility sanctioned in favour of enterprises.
Responding to the statement of bank authorities regarding slashing down of commitment charges as a “goodwill gesture” towards enterprises, FCIK stated that the very concept of penalising the borrowers for non-utilizing or under-utilizing their loans was an anti-customer move, particularly under the sharp and long-prevailing slowdown with a market appetite for the demand of industrial products running at its lowest ebb. The FCIK opined that commitment charges would further affect the health of enterprises at a time when these were already overburdened with huge establishment expenses including bank interest on the money blocked in their inventories and finished goods with no buyers in sight.
As per the statement, countering the claims of J&K Bank about Commitment charges being the lowest in the banking industry, FCIK informed that charges of 25000-50000 rupees on a Rs 200 lakh loan as per the bank’s SOP, issued under Circular 99-673 on the 10th of the current month, could not be termed as a small sum. The charges would proportionally be higher in respect of enterprises with increased limits of the loan.
FCIK asked the bank to realize that several of its competitors in the UT had adopted the policy of not charging commitment fees perhaps in the hope of expanding their customer base.
FCIK acknowledged that both the depositors and borrowers of UT of J&K had emotional bondage with J&K Bank and the enterprises remained attached to it through thick and thin despite the fact that interest rates charged by the bank from enterprises during past over three decades were “unprecedently highest” in the industry.
However, the apex organisation also realises that J&K Bank was the only one to flow credit to the enterprises at a time when all others players in the banking industry had curtailed their operations in the erstwhile state.FCIK hoped that this bonded relation was not affected or marred by some undesired decisions by the bank now.