After Reserve Bank of India (RBI) rejected State Level Bankers' Committee's plea to restructure/reschedule loan accounts, the Jammu and Kashmir government Thursday decided to intervene in safeguarding the interests of the business community by "taking up the issue of restructuring of stressed loan accounts with Union Finance Ministry and Reserve Bank of India."
Officials privy to the development informed Greater Kashmir that decision in this regard has been taken after "intervention at the highest level of governance to safeguard the interest of the business community and prevent further financial distress to them" as the business community is facing severe economic distress due to continuous closure of business establishments for last about five months of unrest in Kashmir.
Talking to Greater Kashmir, Finance Minister Dr. Haseeb Drabu said, "State government is well aware of the issue and we shall intervene appropriately to help the business community which has been put under severe distress in the last five months."
As per state finance department officials, the state government has already initiated weighing their options in seeking restructuring/rescheduling of loan accounts which have become "stressed" due to ongoing unrest.
"There are two options, either state government will declare Kashmir as riot-affected which as per RBI Master Directions will qualify the Valley for restructuring of loan accounts," a senior finance department official said, adding that "other option is to directly approach union finance ministry which would then pass on orders to RBI for restructuring loan accounts in Kashmir."
On Tuesday, RBI rejected the J&K State Level Bankers Committee's plea with the argument that the state government had failed to declare any district or area of the State as "affected by riots or disturbances."
Continuous shutdowns and frequent curfews resulting in stoppage of economic activities in Kashmir for the past about five months have turned around 2 lakh loan accounts into stressed accounts due to borrowers' inability to pay Equated Monthly Installments (EMIs) on time.
The situation has created panic among stakeholders who are now asking banks to restructure their loan accounts. As per bank executives, the continuous lockdown for about five months has turned Rs 5000 crore loan amount into 'stressed loans' for financial institutions in Kashmir, of which major brunt is being faced by state's premier financial institution, Jammu and Kashmir Bank.
Pertinently, Chairman of Jammu and Kashmir Bank and Convener of SLBC, Parvez Ahmad, had pursued RBI to allow restructuring of loans on account of losses incurred by Kashmir economy.
However, in letter no: 342/03.01.17/2016-17 dated November 15, 2016, RBI's General Manager, S.C. Sharma, wrote to the Convener of J&K SLBC, "In terms of our Master Directions on Natural Calamities 2016 dated July 01, 2016, only genuine persons duly identified by the state administration as having been affected by the riots/disturbances are provided assistance."
"In light of our circular, it is imperative that the areas/people affected are identified to consider for the special dispensation. As the district collector/ state government has not yet declared any area as affected by riots or disturbances, the special dispensation required by J&K Bank (SLBC convenor, J&K State) does not fall under our circular", the RBI GM communicated.
Meanwhile, stakeholders criticized the state government's "callousness and insensitivity" for failing to declare Kashmir as "affected by disturbances" so that the Valley qualifies for financial respite under RBI's Master Directions.
"It is bizarre that state government has failed to call joint meeting of District Magistrates who would have in consultation with Lead Bank declared areas in the Valley which remained under curfew/restrictions during the ongoing unrest as "disturbance affected areas," said industrialist and former president of Federation Chamber of Industries Kashmir, ShakeelQalander.
"It seems that government wants to teach business community a lesson for supporting mass uprisings, that is why they didn't declare Kashmir as disturbance affected which automatically as per RBI's Master Directions would allow banks in the Valley to restructure loan accounts without begging before RBI or Union Finance Ministry," he said adding that out of 133 days of shutdown, the government imposed curfew for 99 days and Section 144 still continues.
"If under these circumstances state government doesn't declare these areas as disturbed then what can we expect from them," he said adding that restructuring /rescheduling of loans is in the interest of banks to provide relief in repayment of loans.
President, Kashmir Chamber of Commerce and Industry, Mushtaq Ahmad Wani said that government should have declared Kashmir as "disturbance affected" earlier so that the RBI could not have rejected the SLBC plea.