GK: How would you like to define your bank?
JKB CMD: Ask this question to anyone outside J&K Bank family, they will respond with a uniform answer describing J&K Bank as a pivotal financial institution that has grown steadily while transforming the economic landscape of the entire region i.e. UTs of J&K and Ladakh during the last more than 80 years. They will tell you how the bank has been scripting countless tales of economic prosperity and entrepreneurial excellence, while sharing the lows and highs of both individual and collective journeys of the people of this region.
GK: How strong are the bank’s fundamentals? Tell us about the current performance of the bank.
JKB CMD: Let me tell you that we are fundamentally very strong. Our Q2 (July – September) numbers reflected the trend of turn-around in our financial results when compared to last couple of years despite unprecedented difficulties.
With improving financial indicators, posting net profit of Rs 43.93 Cr in September 2020 after the quarterly loss of Rs 916.82 Cr in the corresponding quarter last year, is quite encouraging for us as we move ahead on the envisaged trajectory of growth towards institutional excellence.
Indicative of our markedly improved asset-quality as on 30th September, 2020, the net NPA ratio has sharply come down to 3.03 % from 4.48 % recorded as on September 30, 2019 while as the Gross NPA ratio has decreased considerably to 8.87 % from 10.64 % recorded last September. The provisioning for bad loans is at 80.40 %, which is one of the highest in the industry as against 71.46 % recorded during the corresponding quarter last year. The bank’s NIM (net interest margin) for Q2 was 3.68 % while as the bank’s Capital Adequacy Ratio was at 11.86 %, which is well above the regulatory norm.
In nutshell, we are moving ahead in right direction and expect greater growth momentum in the coming quarters.
Let me also make a statement that our real strength stems from the unflinching trust and emotional equity of the people of J&K, ever-supportive J&K Government that is also our promoter and major shareholder besides over 12000 emotionally invested J&K Bank Family.
GK: But some time back strong rumors about the merger of the bank started making rounds and these rumors refuse to die even today. Do you lend any credibility to these rumors? Is there any such plan?
JKB CMD: See, these rumors are not new. We faced unprecedented situation in June 2019, which everybody knows and I don’t think we should elaborate it again. I still remember, you asked this question a year back when I was just few months old in chair as Chairman & Managing Director of the Bank. Let me repeat what I told you that time in response to this question.
That time, these kinds of rumors were very disturbing for all of our stakeholders – our customers, employees and shareholders. Today these rumors have lost steam and I vehemently dispel such rumors. Let me put it straight. J&K Bank is a very strong institution and we have been constantly re-inventing to align with the best practices in the industry. The bank is invigorating to stay relevant in the times of rapidly changing technologies that offer great opportunities. We are always pursuing the endeavor to be future ready as a modern, efficient, customer focused, and digitally driven profitable institution.
I am sure that going forward and the changes which are on cards would further strengthen the governance and accountability framework of the Bank. We remain committed to dispense best-in-class service on all fronts besides continuing on the growth trajectory.
So my point is that you look through any prism you will not find even an iota of evidence which suggests or vouches for merger of the bank with any other entity. On the contrary, let me repeat that we are strongly positioned where other smaller banks may get merged with J&K Bank.
GK: How do you compare today’s situation of the bank with the period when you took over as CMD of the bank in most unfavourable situation? And what steps you took to get the bank back on track?
JKB CMD: Simply put, we have overcome those difficult times and are ushering back into the sunshine of growth, profitability and institutional excellence. Our Q2 numbers point clearly in that direction.
First thing that we did was to increase transparency in the system by implementing RTI Act and adopting CVC guidelines. Thereafter, the board was strengthened through deepening of the expertise and diversification of experience in its composition.
All policies of the bank governing its functions be it HR, Credit, Budgeting etc. have been reviewed and aligned to industry best practices. A culture of responsibility and accountability has been nurtured and financial discipline has been reinforced.
GK: COVID pandemic disrupted businesses all over the world. What was its impact on the bank? What initiative the bank rolled out during this COVID crisis to support businesses in J&K?
JKB CMD: The instant country-wide lockdown triggered by the pandemic brought the life itself to a standstill not to talk of business. However, our customers remain at the center of our strategies. Their safety is of paramount importance to us. And it is with their support and cooperation that we have been able to cope with Covid 19 crisis successfully.
Being a responsible financial institution, we immediately invoked our Business Continuity Plan (BCP) and constituted Quick Response Teams at the CHQ level to ensure that the lockdown effects are mitigated to bare minimum on the availability of banking services and facilities to the people of this region. Furthermore, while maintaining social distancing norms and following all the necessary health advisories concerning the staff and customers, we leveraged the digital domains to hilt and encouraged our customers to avail our online banking services and facilities.
And during these last eight months, the Central Government announced many financial relief packages to support the borrowers affected by the pandemic, which the bank promptly passed on to the general public from time to time.
Under the Government’s Atmanirbhar Yojana and its own devised schemes, the bank has so far disbursed over Rs 1787 Cr to 51232 affected borrowers across the country through various schemes. Out of these, Rs 1723 Cr were disbursed under Guaranteed Emergency Credit Line (GECL) Scheme to 47640 borrowers while as 3213 beneficiaries also received over Rs 3 Cr under PM Street Vendors Atma Nirbhar Nidhi (PM SVANidhi) scheme. In addition to that Rs 60.91 Cr were disbursed by the bank under its specially tailored Business Support Loan Scheme.
Meanwhile, the Government of J&K UT also announced a financial package of Rs 1350 Cr for the eligible businesses affected by the ongoing Covid 19 pandemic that included providing 5% interest subvention to the affected borrowers of J&K. The comprehensive package has been quite effective to the extent of, what I called, a game-changing step to revive the economy of the region.
So far, J&K government has released Rs 250 Cr in the first tranche of its business revival package. J&K Bank alone has received Rs 222 Cr, which the bank has passed on as much needed relief to over 2.61 lac eligible beneficiary accounts that includes 5% interest subvention for the eligible borrowers affected by Covid-19 and the restructured accounts of 2014-floods and 2016-disruption.
It has provided much needed relief to the business and traders community who had been pegged back by the unprecedented pandemic. For such a huge relief and revival package that has helped the entire trader and business community besides banks operating in the region, all the credit goes to the Government of J&K UT led by the visionary Lt. Governor Manoj Sinha Ji, who is very much concerned about the economic development of the people of J&K.
Besides, following the regulatory directions the bank also made an ex-gratia payment of around Rs 21.53 Cr – being the difference between compound interest and simple interest for six months –to its 673505 eligible borrowers well before the deadline provided by the regulator.
GK: We have seen surge in share price of the bank recently. What are the factors driving the share in upward direction?
JKB CMD: With improved performance and better value-proposition for the investors the share-price reacts accordingly.
The bank has vastly improved in terms of major financial parameters like NIM, Gross NPA and Net NPA Provisions, CASA Ratio, Capital Adequacy Ratio and its gradually improving bottom-line i.e. profits. These reflect in the improved share prices of the bank.
GK: You recently announced that the bank would be raising capital of Rs.4500 crore from market. Would you like to elaborate it? Why bank is raising the capital? How it is going to make the bank stronger?
JKB CMD: Yes, the bank’s board, and subsequently its share-holders, approved the proposal of raising capital of Rs 4500 Cr from market.
The proposal included ‘raising Equity Share Capital up to Rs 3500 Cr in one or more tranches by way of Rights Issue/Preferential Allotment/Private Placement/Qualified Institutional Placement (QIP)/ESPS or any other approved mode. Besides, raising of Capital up to Rs 1000 Cr by way of Non-Convertible, Redeemable, Unsecured, BASEL III Compliant, TIER-II bonds in the nature of debentures on a private placement basis.’
The decision has been taken to improve the bank’s capital adequacy to continue remaining compliant with Basel-III norms in the coming quarters. Besides, such a capital cushion will considerably help in fuelling further growth and development of the bank by increasing its risk bearing capacity to become stronger. It will also give a push to increased lending to the productive sectors of the economy, thereby aiding accelerated economic growth of the region in particular.
GK: What are your expectations from the market vis-a-vis your capital target?
JKB CMD: Historically, there has been a very good appetite for J&K Bank’s shares in the market as bank has always proved to be a value proposition especially for long term investors. The bank being on the resurgence path towards better profits and growth, we foresee a positive demand for its share during our capital raising exercise.
GK: Since government is the majority shareholder, do you think they would be able to maintain the majority stake through capital infusion?
JKB CMD: J&K government has always maintained majority stake in the bank, and, in the recent past it has increased its share-holding from 53% to 68% through fresh capital infusion. The government shall continue to support the bank for further infusion as and when required.
GK: How do you view the response of corporate Inc. to the bank’s capital offer?
JKB CMD: Market sentiments about J&K Bank are generally positive. During the heydays, the share of the foreign portfolio investors in the capital of the bank had even crossed 30% level. With the improving financial parameters, as already discussed earlier, in the bank, we foresee a resumption in the appetite of FPCs and domestic corporates for the Bank’s shares.
GK: What is your message to the customers vis-a-viz capital raising?
JKB CMD: At the time of IPO of the bank way back in 1998, the customers-especially in J&K- had very little knowledge about the shares or investment options in the stock market, still they overwhelmingly participated in the IPO which was hugely oversubscribed because of the faith in the bank. Their faith was rewarded by huge appreciation in the share value of the bank.
The customers of the bank today are more enlightened about the share market and with their continued faith in the bank we expect a very good response from their side to the new capital/share issue.
GK: How would you like to define your corporate governance?
JKB CMD: Our core values have been and remain to serve people with honesty, integrity, commitment, transparency and trust besides enhancing the value of stake-holders’ equity. This is what makes corporate governance – set-of-rules-based-mechanism in place to run a company – the most important aspect of the bank and from the day one I assumed the charge as CMD, it has remained quite high on the priority list. The subsequent implementation of RTI Act besides CVC guidelines have already shaped the things up as far as the improvement in corporate governance is concerned.
Today, we have got a very strong board-of-directors comprised of professionals from different backgrounds having sufficient knowledge, varied expertise and diverse experience about the banking, finance and associated fields. Ranging from capable administrators to reputed corporate leaders, from risk specialists to accounting experts to knowledgeable regulators, the board represents and reflects the bank’s intent as well as the capability to work for excellence in every sphere of its strategy and execution.
GK: We have witnessed a sort of consolidation of branches and office network in the past two years. Will this consolidation plan have any impact on the expansion?
JKB CMD: We have taken multiple measures for rationalization of costs that include close/slash merger of controlling and administration offices, de-hiring of unoccupied premises, and conducting meetings in virtual mode and shifting of transactions to digital platforms to bring down transaction costs. We have also brought the cost of deposits down considerably from 5.04 % recorded in June quarter of 2019 to 4.20% in our Q2 for the current financial year.
Having said that, there cannot be any compromise on the quality of operations, services rendered to our customers and people in general. Also, the bank’s expansion plans shall continue as per the policy both within physical and digital domains.
GK: Bank has started recruitment process as exams of the candidates are underway. Would you like to define the recruitment process? What’s the timeline of completing the process?
JKB CMD: The Bank has started a recruitment process for 350 Probationary Officers (PO) and 1500 Banking Associates. The results of preliminary exams for the PO posts have already been declared. The PO Mains examination will be held on December 27, 2020.
The online test for the recruitment of Banking Associates (Clerical Cadre) is slated to be conducted in middle of January 2021 and notifications regarding the same has already been issued.
The final list for both the cadres is expected to be out by the end of March 2021.
The examinations are being directly held by the Institute of Banking Personnel Selection (IBPS), Mumbai – a prestigious agency of impeccable track record – with technical expertise being facilitated by the Tata Consultancy Services (TCS).
The bank has also initiated the process for the recruitment of specialised posts.
GK: Customer satisfaction has been your most preferred area and you have been pushing your staff to achieve delight of customers. How do you rate your customer service? What are the areas of strength in this regard? What are future plans to revolutionize customer service?
JKB CMD: I rate J&K Bank Customer Service very good. As you are well aware that Customer Service has great significance in banking industry and we are constantly striving to meet the customer demand for on-the-go services while staying in compliance with the regulations.
The relationship we have with each and every customer is important to us and we at the bank are working tirelessly every day to provide quality services to the customers to their delight with wider choice of products and services.
The bank ensures that all kinds of infrastructure facilities are available at the Business Units for our valuable customers more particularly for pensioners, senior citizens, and the specially-abled.
The Bank has adopted the policy of holding regular training programmes for the staff in line with Customer Service orientation, rewarding the Best Business Units and the Best Employees for Best Customer Service. In view of COVID-19 this process has got affected temporarily at present and now the bank is going to arrange online training to the staff regarding the same.
The bank is working continuously to improve the quality of service through customer satisfaction surveys and customer advisory forum meets regularly conducted at operative levels as per regulatory guidelines. Bank has adopted the Centralized Customer Complaint Tracking System which provides a secure and centralized platform for receiving complaints. One important feature of CMS is that the acknowledgement goes to complainant on his Email & mobile number as soon his request/ communication is registered in the system and a unique reference ID is automatically generated and conveyed to the customer for future reference.
We have a strong team of officers/executives at corporate level as well as at all zonal office level, who are looking into the complaints received through various channels and their disposal is being monitored by the highest level of executives of the bank at corporate level besides by a special committee of board-of-directors.
GK: What are the initiatives which you have taken to keep the staff at all levels updated – I mean know your organization and knowledge management initiatives?
JKB CMD: I am proudly stating that J&K Bank is perhaps the only organization in the industry which has done innovation on internal communication front. We have innovated a unique internal communication model and established a full-fledged department by the name of Internal Communication and Knowledge Management (ICKM). The department is assigned with the job of keeping the staff updated about the day-to-day happenings in banking, finance and economy. Extensive financial knowledge and economic education also falls within the ambit of the department. ICKM is consistently using innovative technology tools and communication channels to aware staff at all levels about the products and services of the bank in a play-way method. One of the initiatives of the department is its publication of monthly magazine ‘Trust’ that has been devised to enhance the financial knowledge of our staff at all levels.
The department also runs an e-newsletter that has transformed into a kind of 24×7 web portal meant exclusively for staff with relevant news/information updated in real-time. Also, the department has begun using social media platform like WhatsApp, Facebook to keep staff abreast with the internal communication of the bank besides industry updates.
Moreover, they are working on platforms like digital library which will be available to the staff on the bank’s internal platform intranet besides other such platforms that help in quick sharing of documents/files among the staff and swift resolution of staff queries.
And, one more important thing I want to share with you is that ICKM is a paperless department as it’s connecting to every member of the J&K Bank family through online mode.
Precisely, just within a span of two years, the functioning of the department has become noticeable with roll out of tailor-made employee-oriented knowledge management initiatives to transform each employee into a knowledge bank. Ultimately, a knowledgeable employee will be a strong source of achieving customers’ delight.
So, a lot is coming up on this front too.