The Reserve Bank of India (RBI) is likely to approve the proposal of Jammu and Kashmir administration to extend repayment of loans by 90 days owing to uncertain conditions, which prevailed in J&K post August 5, when Centre announced its decision to abrogate J&K’s special status and divided the erstwhile State into two union territories.
Financial Institutions inJ&K are waiting for RBI’s approval to implement recommendations of thespecial State Level Banker’s Committee (SLBC) which had recommended extensionin repayment of loans by 90 days.
Chairman and ManagingDirector of J&K Bank R K Chibber while talking to Greater Kashmirsaid, “RBI’s nod will come anytime soon.”
A senior official ofFinance Department informed that the final decision in this regard will betaken by the banking regulator- RBI. “The RBI will issue Master Circular byvirtue of which financial institutions can implement the recommendations of thespecial SLBC chaired by J&K Chief Secretary.”
“In 2016, the thengovernment headed by PDP had approached the RBI to allow restructuring ofloans. The RBI had issued a Master circular to restructure the loans. It provedto be a breather for business community as many establishments at that point oftime were on verge of becoming Non-Performing Assets (NPAs),” he said addingthat “at present also threat about large number of accounts becoming NPAs islooming large. Business community needs a breather,” the official added.
Since August 5uncertainty has been prevailing in Jammu and Kashmir particularly in Kashmirprovince where shops and business establishments remained closed and publictransport was off the roads for more than 120 days.
Special SLBC was convenedby J&K Bank, Convener J&K SLBC, to address difficulties faced by theborrowers and the banks due to disruption in business in the J&K sinceAugust 2019.The meeting was presided over by Chief Secretary J&K B V RSubrahmanyam.
Special SLBC afterreviewing the overall situation in the J&K State recommended extension ofrepayment period by up to ninety days besides relaxation in income recognitionand asset classification norms for favorable consideration of Reserve Bank ofIndia in addition SLBC noted the Master Circular of RBI on Relief Measures byBanks in Areas affected by Natural Calamities and also recommended the same forits applicability in the light of current situation in J&K.
The SLBC had also soughtthe applicability of the special dispensation to all banks operating in J&Kincluding regional rural banks and cooperative banks in the meeting.
These steps are expectedto provide the much needed relief to the borrowers as well as the banksoperating in the state and will help them tide over the difficulties arisingdue to the current situation.
“However theserecommendations put forward by the SLBC are subject to the approval by theReserve Bank of India. These steps are expected to provide the much neededrelief to the borrowers as well as the banks operating in the J&K and willhelp them tide over the difficulties arising due to the currentsituation,” an official said.