Five months of unrest in Kashmir has badly hit banking sector as the non-performing assets (NPAs) of banks rose from 5.39 percent to alarming 7.08 percent, pointing at the economic meltdown the state's economy is passing through, an official report reveals.
The Economic Survey Report 2016- tabled in the Legislative Assembly has made startling revelation about the banking sector in JK witnessing increase in bad loans highlighting the rising NPAs.
"Gross NPAs of the banking sector in the state has increased from 5.39 percent as on 31st March 2016 to 7.08 percent as on 30th September 2016," the report reads.
Nonperforming asset (NPA) refers to a classification for loans on the books of financial institutions that are in default or are in arrears on scheduled payments of principal or interest. In most cases, debt is classified as nonperforming when loan payments have not been made for a period of 90 days.
" The general estimates of the losses caused due to the unrest are estimated at more than Rs 16,000 crore over a period of 5 months from 8th July 2016 to 30th November 2016," it states adding that the impact has resulted in the borrowers inability to conduct their business in normal manner, operate their business accounts in smooth manner and repay interest and instalments of Term loans in time from July 2016 onwards.
"Consequently huge credit portfolio of the banks operating in the state is under stress and may slip to NPA," it mentions.
"Further the impact of continued turmoil/disturbances on the credit dispensation by banking sector in the state is concerned, it is to submit that the total credit disbursed by banks under Annual Credit Plan 2016—17 as at the end of first half of Current Financial Year (CFY) stood at Rs 5,631 crore (20.37 percent of the ACP target) as compared to credit disbursement of Rs 8,080.21 crore (34.23 percent of ACP target as at the end of the first half of FY 2015-16 which indicates decrease of Rs 2,249.08 crore (30 percent decrease in disbursement of credit," the report mentions.
It state that owing to lack of adequate credit disbursements, "the Credit Deposit Ratio of the state has declined by 1.47 percent (from 49.11 percent as on 31.3.2016 to 47.64 percent as on 30th September 2016)".
The report mentions JK has 24 PSU banks, 9 Private sector banks, 2 regional rural banks, 10 state and central co-operative banks and a state owned financial corporation.
"There are a total of 1998 branches in entire state as on 31st March 2016, besides banking branches, there are 1456 banking correspondents spread across the state," it states.