J&K Bank management Monday issued a clarification regarding the recent news item commenting on the performance of bank’s share price.
A communiqué issued by the bank’s president for Corporate Communication Department states J&K Bank has seen a turnaround from losses of the order of Rs 1632 crore in Financial Year 2016-2017 to a net profit on sustainable basis for the last six quarters.
For the first half of current financial year, the bank has reported a net profit of around Rs 146 crore with a gross turnover of Rs 1.5 lakh crore including contribution of 1.05 lakh crore from Jammu and Kashmir state.
Net NPAs of the bank are currently down to a comfortable level of 3.9 percent with NPA coverage of around 70 percent.
The basic parameters are moving towards stability and recovery which is evident from the key financial indicators of the bank as on September 2018 and are being presented here in the Box for the information of general public and investors.
The current share prices of various companies including J&K Bank are not discreetly indicative of the fundamental health of the company, owing to the overall market sentiments showing signs of volatility due to multiple factors including global trends and pre-election swings, which have pulled the Sensex down by 6000 points over the last two months while Nifty PSU banks have declined by 50 percent year-on-year. The management informs all that J&K Bank is going forward with is sustainable growth, stability and healthy business expansion. The intrinsic value of the institution is strong and post the short-term volatility will eventually reflect in the long-term performance of market share prices.
Elaborating on the capital infusion, president Corporate Communications mentioned that almost 10 public sector banks that have received around 28,000 crore capital infusion from the central government have witnessed a minimum of 43 percent to 60 percent erosion in infused value. At the national level, banking sector has grown by 14 percent and in our state, J&K Bank credit has grown more than 23 percent, which reflects the intrinsic strength of the state government’s timely and far sighted decision of capital infusion in the state owned bank in line with the policy of the central government to provide capital support to the government owned banks to meet the regulatory requirements and credit expansion in view of the systemic importance of these banks, It has enabled us to provide the growth capital to the entrepreneurs besides expansion of bank’s business resulting in a positive impact on direct and indirect job creation for the youths of the state.
Clarifying on the governance issues in the report, the spokesperson informed that the board of directors of the bank has been reconstituted/ revamped to align it with compliance framework of Banking Regulation Act, Companies Act and SEBI guidelines and also in line with the good corporate governance practice. The constitution of the board as it stands today consists of a judicious mix of executive, non-executive and independent directors, having considerable professional experience and expertise in their respective fields to impart value and directions to the board. The board has invested itself in making systems more efficient and transparent to create a future ready organisation by proactive and consistent interventions to steer the bank during turbulent times in the banking industry.
On asset sale, the bank communicated that in line with the industry practice to strengthen the balance sheet and to boost the Capital Adequacy besides hedging the risk of PCA framework of Reserve Bank of India, the board of directors of the bank decided to fast track the recovery of stuck funds in some companies by sale to the Asset Reconstruction Companies in a fair and transparent manner. The bids were solicited under the regulator approved Swiss Challenge Method by competitive bidding through publication in leading newspapers. Due to timely decision of the board, the bank saved itself from imposition of PCA which was imposed on 11 public sector nationalised banks. Imposition of PCA would have had disastrous impact on the overall economy of the state in view of the systemic importance of J&K Bank not only as the only bank lending to existing and new entrepreneurs in every nook and corner of the state, but would have also restricted the job opportunities for the bright and educated youths especially girls who have limited job opportunities in the state. Notably PCA puts an embargo on banks to expand its business and recruitment.
The bank, added the spokesperson, is committed to serving the worthy customers with transparent and progressive objectives to achieve a steady growth and creation of value for all the stakeholders.